This article was first published on The AdEx Blog - Medium
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.
The second one is being ...
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The AdEx Blog - Medium