Earning with $ADS
Alkimi earns revenue by taking a small fee (3-8%) on every successful ad auction run through the exchange. That is, every time an ad is displayed. You can see on Ads Explorer in real time these auctions happening and the CPM (cost per thousand ads) price that a specific auction closes at 1) .
With millions of auctions happening a day (and growing!) this all adds up to significant revenue - all of which goes to holders of the $ADS token (as per the Tokenomics via two means - them running a Validator and/or staking the stADS LP token.
See a breakdown of Pros and Cons of Validator vs LP.
Currently spots for running a Validator (sometimes called a “node”) are limited - these provide the network that the Exchange itself runs on in a decentralised fashion - ensuring speed and robustness.
But anyone holding $ADS can use it to acquire and stake the stADS tokens to earn a revenue share. The way rewards are apportioned between Validators and LPers is explained in the calculation section of the Tokenomics.
Here we'll walk through how to acquire and stake stADS to get your share of Alkimi's growing revenue, while still benefiting from any appreciation of the $ADS token price.2)
Step 1: Buy $ADS (and hold in your own wallet)
Step 1: Buy $ADS (and hold in your own wallet)
1a: Buy $ADS
Firstly you will need some $ADS. The token is an ERC20 token on the Ethereum network. Only 250M $ADS tokens can ever be held, enforced by the Contract that created them. This scarcity is important, because as the demand for $ADS go up from those who want a cut of the Exchange's growing revenue, it puts positive pressure on the price of the limited number of tokens.
You can buy $ADS on a number of centralised exchanges (CEX) or through the decentralised exchange (DEX) Balancer, see these linked on Official Links.
1b: Hold $ADS in a self-custodial wallet
If you have bought through a centralised exchange, then your tokens are held in the Ethereum wallets owned by that exchange. There is an expression in crypto, “not your keys, not your coins”. This refers to the fact that while an Exchange say you “own” the tokens, you have to put trust in them to actually have them, and you aren't able to do all the things with them that holding them yourself allows you to do. Such as earn yield from your $ADS!
To do this you will need to withdraw your $ADS to a “self-custody wallet”. We recommend Metamask as being relatively simple and very well supported across crypto.
However, do you own research and if you are very concerned with security, consider something like a Ledger hardware device that enhances the security of wallets like Metamask and is compatible with the Alkimi ecosystem.
Whichever you choose - you will have an ethereum wallet address associated with it. You will need to use the “withdraw” function on the CEX you chose to send it to this address. Make sure you choose the Ethereum/ERC20 network when doing so. The CEX will likely charge you a small number of your $ADS as a withdrawal fee.
Step 2: Acquire stADS (by providing liquidity)
Step 2: Acquire stADS (by providing liquidity)
Background to Liquidity Pools
Centralised Exchanges work largely how share trading platforms do - using an “order book”. This means that you list the price you wish to buy/sell $ADS at and the exchange waits until someone matches your price and then conducts the trade for you, taking a small fee.
Decentralised Exchange work quite differently, and don't require the orders of two users to match. This allows for instantaneous trades, without the need for a “market maker” that typically facilitate CEX trades and whivh can manipulate prices.
A DEX works by having “liquidity providers” (LPers) “pool” two tokens together - one is the token that “liquidity” 3) is being provided for and the other is typically a major token like a stablecoin (USDT,USDC etc) or ETH. In this way, the token can be readily traded for most any other token - not just its pair - as the DEX will use multiple pools to swap from one coin to another, to another. 4)
When a Liquidity Pool is setup, the user sets the initial exchange-rate between the two tokens. This essentially prices it. So TokenX might be paired with USDC at a 10:1 ratio. Which means that the initial price of TokenX is $0.10c. They will then fund the LP by providing a large number of both tokens, e.g. 1M TokenX and $100K USDC. In exchange for providing these two tokens, the user receives “staking tokens” in return, e.g. stTokenX in the case of our example. This is the receipt that represents their ownership of tokens in the pool. Once setup, the pool can now facilitate trading.
Trading works by a user swapping tokens with the LP. If they wish to buy TokenX they swap USDC with the pool for it. The pool removes some of tokenX and replaces them with USDC. This means that the pool now has less TokenX and more USDC. As a result the ratio between them has changed, and as a consequence so has the price. TokenX might now be worth $0.11c.
The exactly way the price is effected is based on a formula, which varies slightly between DEX. 5)
Impermanent Loss
As you can see in our example, the number of TokenX and USDC in the pool will change as people swap tokens through it. This impacts on all users who hold LP positions equally - i.e. if the pool has “sold” more TokenX than USDC than when they LPed, their position will be comprised of less TokenX and more USDC. The value of each TokenX they hold may be more, but because they have less of them - when taking into account the value of the USDC - they may have suffered “impermanent loss” (IL).
Impermanent loss refers to the fact that in some cases, where TokenX price has gone up (and thus the LPers hold less of it than when they started due to it being swapped for USDC), the user's total TokenX portfolio would have been worth more if they had simply held the TokenX tokens rather than LPing them. This is not always the case, for instance if TokenX was paired with a non-stable coin (e.g. ETH) and it also went up in value proportional to TokenX there would be no IL.
Balancer provide a tool that allow you to model different scenarios of token price change to estimate the potential IL. It is important to note that you are not “losing” value as such - you are just suffering from an opportunity cost, whereby not LPing may have meant your investment was worth even more in the case where the token goes up.
$ADS use a 80-20 pool (rather than 50-50 which is another common pool format) to minimise potential IL. But the main “protection” against IL with $ADS is staking stADS. The share of revenue you receive should ultimately outweigh any IL and provide extra yield on top of this. However, you should do your own research and run the numbers on this yourself.
2a: Acquire the correct amount of ETH
The 80-20 $ADS-ETH pool means that to join the pool you need to supply a mix of $ADS and ETH in a ratio of 80% of the value being $ADS, 20% in ETH. 6) This ratio is not setting the price of $ADS, that has already been done.
You can buy the ETH on a CEX, or through Balancer itself. You will need to look at the current value of your $ADS (in USD) and multiply that by 0.25 to get the value of ETH (in USD) you need.
2b: LP your $ADS and ETH on Balancer
You then need to go to Balancer and connect your wallet on the $ADS-ETH Pool page. Click the “Add Liquidity” button and a pop-up will allow you to choose how much $ADS and ETH to add.
You will see the number of stADS tokens you will receive as a result. Press preview, then when you are happy accept the transaction and sign in your wallet. Balancer will remove our $ADS and ETH and transfer you stADS.
You will immediately begin accruing some rewards after doing this - as every stADS holder gets a percentage of the 0.3% fee that Balancer charges on all trades through the pool. These compound into your LP position (you do not receive more stADS - the value of stADS instead increases slightly with each trade.)
However, to receive your share of Alkimi's revenue you will need to stake these stADS, not on Balancer (ignore the staking option mentioned on that site, this isn't used in our case) but on Alkimi Labs.
Step 3: Stake stADS on Alkimi Labs
Step 3: Stake stADS on Alkimi Labs
The process to stake stADS on Alkimi Labs requires you to sign-up for an account and to pass KYC (“Know Your Customer” - presenting some personal ID). As this might take 2-3 days if the KYC needs to be checked manually, you can do it in parallel/before acquiring your stADS.
3a: Signup for Labs
Go to Alkimi Labs and connect the wallet that you wish to use as your login for the site - Alkimi uses a web3 login with your wallet, rather than username and password. This wallet, which we call your primary wallet, doesn't need to be the one that contains $ADS or stADS, as you can add these as additional wallets after.
When signing up you will need to provide an email address and will be presented a “backup phrase”. This is not your crypto wallet “seedphrase” - it is used if you ever lose access to your primary wallet and allows you to select one of your “secondary” wallet as your new login to regain access. 7)
This X Thread provides step-by-step for signing up.
3b: Add additional wallet(s) to your account
Under your Labs account section you can see Linked Wallets. This lists all wallets associated with your account. If your $ADS/stADS are not in your primary wallet, you should disconnect it and connect this wallet - Labs will then prompt you to add it as a secondary wallet. (Disconnecting your primary wallet does not log you out, you do this from your account section if you wish to, or simply wait as the login expires after some time of inactivity.)
3c: Verify Email and pass KYC
Under your Labs account section you can see your Email verification and KYC status. You will need both to be “verified” to stake. If you click through on the KYC link you will go to a 3rd party “BlockPass” and be required to provide details and ID.
If your KYC is still “under review” after 72-hours please open a support ticket on the Alkimi Discord in the #support-ticket channel.
3d: Enrol in staking
Under the Staking section of Alkimi Labs you can see details on the staking pool. If you click “Enroll into Staking” Labs will determine how many stADS and then ask how many you wish to stake.
Staking is “soft staking” - meaning the stADS never leave your wallet. You just give Labs permission to check your wallet everyday for your stADS total. You will receive rewards for the total number of stADS you have on each day - based on your proportion of the number of total stADS staked.
Step 4: Tracking Rewards
Step 4: Tracking Rewards
Under the Staking section of Alkimi Labs you will see a daily graph with how much revenue share you have received each day of a month (displayed in USD value). This first displays a total ~24-hours after you first stake. The total rewards accumulated for the quarter are shown on the top-right of the graph.
Step 5: Receiving Rewards
Step 5: Receiving Rewards
In advertising/media invoices tend to be paid on a t90 day basis. This means Alkimi is continuously receiving revenue for the previous quarter. In order to calculate the amount available for reward distribution it takes the total revenue from the previous quarter and then distributes that across the current quarter to Validators and LP on a daily basis.
Your daily share is shown on Labs, but you are paid out once at the beginning of the next quarter for the previous quarters rewards. You are paid in stADS, of equivalent value to the revenue share. This amount is airdropped to you and you do not need to take any action. When it has been done, it will be announced on Alkimi community channels.
Step 6: Adding to your stake
Step 6: Adding to your stake
If you acquire more $ADS you can go through the same process to create more stADS and stake these. Or you can stake your stADS that you receive as quarterly rewards to compound them.
6a: Increasing your LP position
You can acquire more stADS at any point by simply using the “Add Liquidity” function on Balancer again. You will need to go through the same “enrol” process to ensure your total staked amount matches the total amount of stADS you have.
6b: Compounding rewards
The stADS you receive as rewards do not auto-compound. You will need to go through the same “enrol” process to ensure your total staked amount matches the total amount of stADS you have.
Unstaking
Unstaking
If you no longer wish to earn yield on your $ADS you can convert your stADS back to regular $ADS at any point - there is no lock-up at all.
Unstaking from Labs
You don't need to do anything to formally unstake from Labs. When Labs does its daily check of your stADS tally and finds less (or no) tokens there it will simply adjust your rewards accordingly.
Removing $ADS from Balancer
If you wish to leave the Liquidity Pool entirely then go to the $ADS-ETH pool on Balancer and use the “Withdraw” function.
When doing so you can either withdraw as “Proportional pool tokens” which means 80/20 $ADS and ETH. Or as a “single” token. If you withdraw as only $ADS, you are selling your ETH for $ADS at the current price and vice versa.
Once you sign the contract your stADS tokens will be swapped for the mix of $ADS and/or ETH you chose.
NB: You can also use this function to also withdraw only part of your position.