The adChain Registry ELI5

A basic summary of the adChain Registry

Written by Hunter Gebron

ELI5 is a popular acronym that stands for, “explain like I’m five.” The following article will attempt to explain the adChain Registry in simple terms.

Summary:

1 adToken = 1 vote

The adChain Registry is a curated list of websites (publishers) that serve digital advertisements.

adToken (ADT) is essential to the utility of the adChain Registry.

“Token-curated registries (TCR’s) like adChain are decentrally-curated lists with intrinsic economic incentives for token holders to curate the list’s contents judiciously.”

Advertisers, publishers, and adToken holders can all derive benefit from the adChain Registry in a virtuous cycle.

To date, we have published a lot of technical documentation, a white paper, and articles related to token curated registries (TCR’s) [1] [2]. Much of that has been very in-depth. But the idea behind token curated registries like the adChain Registry is simple. The goal is just to curate a list.

However, putting simple ideas into practice on the blockchain can be difficult to execute and even more difficult to explain.

The goal of this article is to strip away the technical details surrounding the adChain Registry and to focus on — how it works, why it matters, and how it applies to digital advertising.

Why did we make the adChain Registry?

The adChain Registry was built to solve a rudimental problem for advertisers in the realm of digital advertising — sourcing quality inventory.

Can you explain more about what you mean by inventory?

Sure, every time that you go to a website that shows you an advertisement, that ad is racking up dollars and cents for the website’s owner. Those display boxes you see servings ads are what’s known as “inventory.”

Advertisers spend huge amounts of money — $209 billion worldwide in 2017- across thousands of websites to put digital ads in those inventory slots in order to reach their desired human audiences. The inventory they purchase is accessed through large platforms know as SSP’s and DSP’s, and bought and sold in real time through a bidding process on exchanges that equates to an auction. As it turns out, serving ads on the Internet is a lot like trading stocks on the NYSE.

So what’s the problem?

In a word, fraud. A ton of the money advertisers spend never actually reaches human eyeballs. An estimated $20 billion was siphoned away from legitimate advertisers by fraudsters, bots and shady characters of all types in 2017. That is a HUGE amount of money!

The issue is the way that inventory is aggregated and supplied to advertisers on these large buying and selling platforms. Advertisers are unable to accurately determine if the quality of inventory they are buying is any good. After all, there are thousands of websites serving ads, and to be honest, many of them are just downright fraudulent. Driving bot traffic to sites with terrible content or worse fake news, and in some cases don’t even exist -see domain spoofing — is commonplace.

The blockchain and more specifically cryptoeconomic incentives allow us to build a system for curating a list of the websites that offer legitimate digital advertising inventory so that advertisers can query that list before deciding on whether to serve an ad. A simple check such as, “is the inventory being offered for sale provided by a website that is in the adChain Registry?” If yes, serve the ad. If no, then don’t. This simple check can be leveraged by the large platforms that advertisers use to buy up inventory in real time.

How does the curation process work?

“So long as there are parties which would desire to be curated into a given list, a market can exist in which the incentives of rational, self-interested token holders are aligned towards curating a list of high quality.” — Mike Goldin

The adChain Registry is known as a token curated registry (TCR) because it relies on a community of token holders to curate it. The token for the adChain Registry is called adToken (ADT), and curation takes place through various stages of applying, challenging and voting. To sweeten the pot, we built a rewards system to incentivize participants to curate judiciously.

The goal of the adChain Registry is to provide advertisers with a list of websites that offer high-quality inventory for serving digital ads.

For adChain to be curated in such a way that it provides high-quality listings for advertisers, it requires a native token like adToken whose value is pegged directly to the quality of the listings in the registry.

Let’s dive into each aspect of the registry and how it works!

Applying

Anyone can apply a website into the adChain Registry. All that it requires is a minimum deposit paid in adToken and the URL of the domain being applied. If you are wondering who sets the minimum deposit amount, it’s the community, through a decentralized governance process — to learn more about governance in the adChain Registry click here. But for our sake let’s assume the minimum deposit amount is 100 adToken. To apply the website adchain.com into the registry, you would follow the instructions to apply a domain in the dapp and pay 100 adToken. Voila! That’s it. If you make it through the application stage length period without being challenged, then your website will be admitted into the registry.

Challenging

Since applications are open to anyone, there needs to be a method in place to ensure illegitimate or fraudulent websites can’t squeak in. This is where challenging comes into play. Websites in the application phase are eligible to be challenged by anyone at anytime. To issue a challenge, you match the same minimum deposit amount the website made to apply. So if you wanted to challenge adchain.com, you would pay 100 adToken to do so.

Voting

If a website gets challenged, then it kicks-off a voting phase. During the voting phase, all community members can vote to either support or oppose the website being challenged. The adChain Registry uses a token weighted voting system called Partial Lock Commit Reveal (PLCR). This means that 1 adToken = 1 vote. So the more tokens that you use, the more votes you can commit.

If the majority of the community votes to support a website, then it will get added to the registry. If the majority the community votes to oppose a website, then it will be rejected from the registry.

It’s as simple as that.

adToken Rewards

Applicants, Challengers, and Voters can all earn adToken rewards as a result of winning by majority vote. These are called special dispensation rewards. If the applicant wins the vote, then the special dispensation is paid out of the challengers minimum deposit, and if the challenger wins the vote, then the special dispensation is paid out of the applicants minimum deposit.

Voters that voted on the winning side also receive a portion of the special dispensation reward distributed according to their token weight, i.e., the more token used to vote with the bigger the share of the reward. See voter rewards for more.

The virtuous cycle between advertisers, publishers, and adToken holders

“There are three user types in a token-curated registry, and each has different interests, incentives, and interaction patterns towards the registry. Consumers desire high-quality lists. Candidates desire to be included in such lists. Token holders desire to increase the price of the tokens they hold.” — Mike Goldin

In the adChain Registry TCR — advertisers will derive value if it represents a premium source of inventory. Therefore, adToken holders are incentivized to curate a high-quality list of publishers (websites) because that equates to more value for the registry’s native token, ADT.

In the global digital advertising ecosystem, advertisers, because they have all of the money, hold all of the cards. And publishers need advertiser dollars to stay in business. If advertisers value the adChain Registry, then publishers will desire to be listed — for access to those advertising dollars. This further increases the demand for adToken since publishers are required to stake a minimum deposit in adToken to apply.

This is the virtuous cycle between advertisers, publishers, and adToken holders.

Conclusion

MetaX alongside ConsenSys pioneered the concept of token curated registries, and we are excited to land the adChain Registry to its final production ready state. The adChain Registry is a fully fledged decentralized application complete with a customizable user interface that’s tied into a smart contract library. We are set to launch on the Ethereum Mainnet very soon!

A decentralized pool of premium advertising inventory will be a welcome sight for the digital advertising industry, and we are excited for you to take part in curating it! For a more detailed explanation of the registry and how it works we invite you to check out our resource center.

Thanks for reading!