AdEx Staking: A New Chapter of ADX Token Economics & Staking Migration

AdEx staking so far

AdEx staking was launched in 2019 and has since distributed over 20 million $ADX, coming from both protocol revenue (mainly from the AdEx ad platform) and newly minted $ADX.

Tom, the main $ADX staking pool has managed to lock over 35% of the total $ADX supply and earned more than 30% yield for long-term holders.

This is a win-win setup: all “extra” tokens are distributed to loyal holders who commit to staking. Pool Tom has a 30-day, governance-adjustable lock period. This works perfectly for protocol revenue, which is used to buy $ADX and therefore remove it from circulation. Even newly minted $ADX tokens lead to a positive impact, because:

1. It incentivizes more $ADX to be locked in the pool; and
2. It dilutes non-stakers but rewards stakers, effectively transferring value to stakers.

However, with $ADX reaching its supply cap of 150 million, staking rewards now come exclusively from the $ADX DAO treasury and protocol revenue, so this token economics primitive is even stronger and doesn’t need as high of an APY to work.

AURA protocol revenue

Ever since the announcement of AdEx AURA - our AI agent framework - it has become clear that there are numerous new potential sources of protocol revenue. For example, fees for boosting or sponsoring suggestions, AI agent execution fees, integration fees, or simply charges for API calls, just to name a few. All of these will be paid in $ADX - even if other tokens are used, the fees will be instantly converted to $ADX.

Indirectly, the security guarantee, which acts as a “listing deposit” for more exotic protocols to be considered by AURA, also contributes to protocol revenue, as it drives more $ADX to be locked, thereby increasing its value.

In light of all this new potential and expanded token use cases, a new, more flexible staking mechanism is needed.

New token economics: one pool

In summary, the main advancements and developments, namely $ADX reaching its supply cap, new revenue streams from AURA utility use cases: boosting/sponsorship, AI agent execution, and API calls; and the security guarantee for AURA, have called for a fresh look at the AdEx Staking mechanism. Here’s what we came up with:

• One single pool for the entire AdEx ecosystem, to unify all protocol revenue and staking rewards
• Rewards will continue to be distributed in locked $ADX. Any other token received as protocol revenue will be converted to $ADX, except integration fees from partner projects, which will follow a separate distribution mechanism.
• Stakers will control their lockup period, and their voting power (in both governance and security guarantee) will be weighted based on the amount staked and their lockup period.
• This gives stakers more incentive to lock tokens beyond just earning APY - longer lockups result in greater visibility in AURA.
• Rewards will also be scaled accordingly, so longer-term holders will be rewarded fairly.
• There will be no unbonding period: your tokens will remain locked for the duration you selected and will unlock at the end of this period. However, similarly to how veCRV works, your “points” (reward basis and voting power) will decrease as you approach the unlock date.
• Forward compatible and upgradable: allowing for more flexibility and future capital efficiency.
• While we believe the core protocol should remain immutable, the staking pool should be upgradable through governance decisions. This means the contract won’t have an owner or admin, but can be upgraded following a governance vote.
• Upgrades will be useful in boosting capital efficiency - for example, the staking pool can utilize its underlying ADX differently (e.g., a small part can be used to LP on Uniswap).

Staking migration proposal

We will be publishing a new governance proposal shortly that will mark the beginning of the development of the new staking mechanism.

The proposal is to move forward with our plan to develop, audit, and deploy two contracts:

• Migrator contract, which will be granted governance permission on the current staking contract
• ADX-STAKINGv2 contract, which will serve as the new staking pool

The Migration mechanism will apply to the Tom pool. It will not have a hard deadline, but there will be a soft deadline in the form of a decay mechanism:

• Once the migration contract is live, all reward distributions to the old staking contract will be frozen
• The principal you originally staked will never delay and will always be migratable to the new contract - you will automatically have a 60-day lock period in the new contract.
• Accounts currently unbonding tokens, regardless of the amount, will not be able to upgrade immediately. They will need to claim their unbonds first.
• Rewards you’ve earned will be migrated in full if you migrate in the first 30 days. After that, your unclaimed rewards will start to decay at a constant rate of 1.11% of your total rewards per day. This means that they will be fully zeroed by the 120th day of the migration, and those tokens will be burned.

There will be a follow-up governance proposal when the two contracts are designed, implemented, and audited, to define the next steps.

An additional governance proposal will also be published regarding an initial migration bonus coming out of the AdEx DAO treasury. This bonus will further incentivize quick migration and will include an extra incentive boost for early testers of the AURA prototype - make sure you don’t miss it.

FAQs

Is the new staking pool only for AURA?

AURA is our flagship product right now, but this pool is designed to be future-proof and be compatible with all upcoming AdEx products.

Why do we need the variable lock and lock-weighting?

This mechanism is crucial for the AdEx AURA security guarantee as outlined in the Vision. It’s also very useful for:

1. fairer reward distribution that favors long-term holders
2. fair governance decisions

Where will the rewards in the new pool come from?

From protocol revenue and, potentially, additional incentives provided by the AdEx DAO treasury.

What will I need to do if I am currently staking?

If you are currently staking, you can migrate your original principal to the new contract at any time with no delays. When you migrate, your tokens will automatically have a 60-day lock period. If you are currently unbonding, you should finish claiming your unbonded tokens before you can migrate. Rewards you’ve already earned will migrate in full if you move within the first 30 days; after that period, unclaimed rewards will gradually decay by 1.11% per day.

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