New token economics and incentivized staking

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Posted by AdEx Network on August 4th, 2020

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Introducing our version of yield farming: security mining

After the token upgrade announcement last week, we’ve been hard at work with the upgrade. However, we have one more surprise for you that we didn’t want to announce until we’ve decided the specifics: we’re introducing new token economics for ADX to encourage staking!

To do that, we’re introducing staking incentives: initially, 7 million new ADX will be minted and distributed to active (bonded) stakers by the end of 2020. This is similar to Compound’s COMP liqudity mining, however while in Compound the goal is to increase pool liquidity, in our case it’s to increase the bonded ADX towards validators, which makes the network more secure: we call that security mining.

Economically, this setup slightly dilutes non-stakers and rewards stakers, therefore enforcing the purpose of ADX as a staking token. Therefore, we believe that in practice, this will reduce the amount of circulating ADX, since holders will be highly incentivized to stake.

Furthermore, ADX is deflationary because of the slashing mechanism built into the staking system, which is to burn some ADX if the pool owner misbehaves in any way. Right now, the main pool (Validator Tom) has no slashing to minimize early risk for stakers, but later on, new pools will frequently burn ADX to enforce network security.

While this means you will earn extra ADX for your staking bonds, do not forget that you will also earn DAI from the validator fees, as illustrated below.

Best of all, we’ve just updated our staking portal, so you can take advantage of the new yield today!

Staking portal changes

A couple of new features are coming to the staking portal. The first one is the APY calculator, which can be seen when creating a bond and in the bond table.

AdEx Staking Portal

The second one is being able to add more ADX to an existing bond, which will allow you to efficiently re-stake your earned ADX without having to open new bonds.

AdEx Staking Portal

Staking portal and the $ADX token upgrade

To enable the incentive rewards, the staking system needs to be upgraded to the new ADX token. This will happen automatically and everyone who’s staked won’t have to do anything.

The ability to withdraw rewards and to request unbond will be temporarily disabled until the 8th of August, but you will still be earning in that time if you have active bonds. The reason for this is that we’re finalizing an update of the rewards distribution system which will make withdrawing rewards cheaper in terms of gas costs, using our identity system.

As a side effect of the upgrade, anyone who’s already requested unbonding of their ADX will have their ADX unlocked and credited to their wallet early on the 5th of August.

AdEx Staking Portal

Early bird bonus

All bonds that were created before August 10 that haven’t requested unbonding qualify for an early bird bonus: 1M ADX (part of the 7M incentive mint) will be distributed only to those stakers, for the duration of one month.

Disclaimer: Once your ADX are locked up (bonded), you will not be able to withdraw them for at least 30 days. When you request that your tokens are released (“request unbond”), you will not receive rewards for that 30 day wait period.

How does this help the AdEx Platform?

ADX bonds reflect the reliability of a certain validator: read more.

By encouraging a more active staking ecosystem, the AdEx validator network becomes stronger: we’re paving the way to an open network where ADX holders govern the selection of validators, leading to even better transparency, decentralization and reliability.

Timeline

  • Early bird subscription: until 10 August
  • Early bird distribution: 5 August - 5 September
  • August 8: ability to re-stake earnings and to request unbonding re-enabled
  • August 11: withdrawing new ADX enabled

Stay tuned for further announcements, there’s more to come!

Staking portal: staking.adex.network

Help desk: help.adex.network

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