What is Staking?
Staking is a way of participating in the AdEx ecosystem, while simultaneously earning generous rewards.
Explained in simple terms, staking is the process of locking a certain amount of ADX tokens in order to increase the trustworthiness of the validators in the platform. Validators are appointed for each side of the advertising campaign (i.e. both the advertiser and the publisher nominate a validator) and that’s a required condition for a campaign on AdEx to run. The more tokens staked, the stronger the reliability of the validator network.
Effectively, staking allows for AdEx users to have governance powers, thus enabling better transparency, reliability, and decentralization of the entire process.
In order to participate in staking and get rewards, you are required to lock up a certain amount of tokens, i.e. create an ADX bond. Each bond has a minimum duration of 20 days and can only be unbonded before these 20 days have passed if you use the Rage Leave option (but you'd lose 30% of your tokens as a penalty and this option is only available on the Staking portal).
Staking is a great way of making your cryptocurrency “work” for you and bring you passive income.
What is a staking pool?
A staking pool is a collection of multiple bonds by any number of users. Each pool has a different purpose, reward policy, and slashing rules- usually a pool would be associated with a validator, meaning that you’d get a portion of that validator’s revenue.
Staking towards a validator pool is essentially a vote of confidence in this particular validator.
Are there risks associated with staking?
Currently AdEx staking does not have slashing.
In addition to this, staking bonds are locked for a certain period of time so in a case of an unexpected market movement, you may not be able to pull your tokens and react quickly.
How does staking help the AdEx platform?
ADX bonds reflect the reliability of the platform validators. A validator must be nominated and be available for each side of a campaign (publisher/SSP and advertiser) in order for the campaign to run. Validators with higher stake will naturally be more trustworthy and less likely to misbehave, as they have more skin in the game. In case they misbehave (e.g. go offline), they could be subject to slashing (a.k.a lose some of their ADX tokens) - and the more ADX staked, the more they could lose.
The reason ADX is the only token allowed for staking is that ideally staking for the registry would be the token's primary use case, as this implies a large part of the token supply would be staked and locked up, therefore making it more expensive to perform a Sybil attack.
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.
You can read more here.