MAD Network - A Decentralized Network for the Advertising Industry
Blockchain technology promises to alleviate many of the programmatic advertising industry’s biggest
pain points. Decentralized networks help disintermediate third-party bundlers and link advertisers
seamlessly with publishers. Additionally, unlike the current market of data secrecy and walled
gardens, distributed systems can more accurately reflect value, effectiveness and campaign reach.
The MAD Network is comprised of three distinct blockchain layers: MADnet Books, MADnet Core
and MADnet Data. The MADtoken will be escrowed to activate a payment channel for the
accounting, fulfillment and instant reconciliation of ad delivery. Advertisers and publishers will have
the option to exchange on credit or settle in real time with their escrowed MADtoken or
cryptocurrency of choice. Ultimately publishers have the final say in how they would like to be paid.
MADnet Books is a private chain maintained by the AdLedger Consortium, designed to track highfrequency
network transactions, expose price manipulation and facilitate accurate reconciliation.
MADnet Core is the decentralized ad server and exchange powered by our proof-of-real-work
algorithm. MADnet Data is a data storage layer that facilitates pseudonymous, one-time-use sharing
of consumer data to increase the value of publisher inventory while drastically improving targeting.
MADNET BOOKS Decentralized Payment Rail
MADnet Books is a decentralized payment rail for staking Insertion Orders using MADtoken, an
ERC20 token issued on Ethereum. MADnet Books will initially be fulfilled via MadHive’s
centralized ad server. The decentralized payment rail will open a tokenized marketplace for
exchanging the value of an impression. Advertising spend tracking will be open to create a fair,
transparent network that penalizes price manipulation. With the advent of the open network,
advertisers will be informed of third parties that are involved in the ad placement. The advertiser,
empowered with data insights, will no longer be beholden to complicated third parties that are
currently taking large margins.
A recent lawsuit explains the state of the ad tech industry. The Guardian sued the Rubicon Project
for “recovery of non-disclosed buyer fees in relation of Guardian inventory.” Exchanges, SSPs and
DSPs often hide fees in the fine print of contracts and manipulate prices by adding arbitrary fees
after private auctions. As The Guardian discovered, the ad tech industry has a reputation of
protecting information by building black-box systems that third parties learn how to manipulate.
Hiding transaction flow allows for bad behavior such as creating fake bids or misrepresenting
transaction prices. The payment rail will empower advertisers to avoid inefficient advertising
spending and increase the value of their spending.
An advertiser will utilize the MADnet Books layer by staking MADtoken to create an Insertion
Order. Insertion Orders are smart contracts that specify how ads should be executed. As
MADtokens are staked, an equivalent value of credit (“MADcred”) will be generated and exchanged
on the MAD Network. The MADcred is paid to the publishers for placing ads in near-real-time.
MADcred will be a non-fungible token with an explicit reference to the Insertion order contract in
a manner consistent with the ERC non-fungible standard. After the MADcred is spent, a publisher
redeems their MADcred in a settlement step based on the payment terms established in the
Insertion Order. The publisher then returns the MADcred to the Insertion Order, signaling receipt
of payment. As the publisher confirms payment, MADbonus is paid to the advertiser. MADbonus is
a loyalty reward for utilizing the MAD Network. If a publisher does not return the MADcred to the
Insertion Order, the advertiser may decide to blacklist them to avoid the possibility of not receiving
the MADbonus in the future.
Advertisers may stake MADbonus in place of MADtoken for their Insertion Order. MADbonus is a
reward for early participation in the network and incentivizes advertisers to continue using the Mad
Network by allowing them to reduce the required amount of MADtoken needed when staking
Insertion Orders. This also solves the problem of the MADtoken market cap being an upper limit
on ad spend that can be delivered on the network at any given time. MADbonus may only be used
MADbonus will be issued in a decay curve. Initially, more MADbonus will be issued to excite new
entrants to use the MAD Network. As the MAD Network grows, MADbonus issuance will be
reduced. Since the MADbonus maintains its value only when the advertiser makes good on its
commitment to pay fiat to publishers, this mechanism further incentivizes publishers to come on
the network in order to gain access to the ad spend committed to the system.
MADNET CORE - Decentralized Ad Server and Exchange
MADnet Core is the ad server designed to execute buying and selling of advertising. MADnet Core
will be powered by our proof-of-real-work algorithm, which combs through ad requests and
campaigns to find fast feasible matches, maximizing throughput simultaneously ensuring campaigns
deliver and inventory gets monetized. Feasible matches are defined as pairings of individual ad
requests to campaigns that meet all publisher and advertiser rules including real time restrictions
such as frequency caps and industry separation.
MADnet Core transactions are candidate matches and blocks are served when a sufficient number
of matches are found. Serving a block indicates that the set of candidate matches has been validated
by other nodes checking the rule set intersection. MADnet Core serving the block includes
executing the orders corresponding to the match transactions with the publishers on behalf of the
advertisers, validates that the ad was served, and keeps an audit trail of events on MADnet Books
allowing for near-real-time feedback to both sides.
The MAD Network follows a proof-of-work protocol in which the cryptographic puzzle
constituting “work” is replaced with a real-world task.
Due to high volumes of ad requests and campaigns running on the network, and the incredibly high
cardinality of the rule sets, finding a match is hard. In the worst case, finding a match is a brute force
challenge with complexity, bound to be determined by the large cardinalities. As “matching rates rise,”
the number N of matches required to discover a block is increased, controlling difficulty and
establishing expected block times. The critical property that makes “ad match finding” a valid puzzle for
proof of work is the fact that verifying the rule set intersection is trivial compared to finding a match.
In the best case, smarter algorithms may uncover patterns allowing a node to estimate match
likelihoods, allowing for faster mining (“matching”). Smart algorithms that “match” faster can be seen
as analogous to the addition of GPUs to the Bitcoin ecosystem — here, the parameter N ramps
significantly to control block times to the desired rate, but the difficulty feedback in the mechanism
ensures that while innovations in matching algorithms may yield short-term boons to miners
(“matchers”), the network will not lose its intended proof-of-work property as long as there is
sufficient demand for advertising.
Note that the existing ad tech ecosystem currently serves millions of ads per second. An additional
property of this solution is the fact that the matching incentives drive the system toward a state of
being able to serve more ads per second with the same hardware, helping to ensure the network can
scale to meet the demand of the ad tech ecosystem, and getting the auditability provided by blockchain
governance, all without wasting energy on hashing computation.
The proof-of-real-work scheme is subject to the criticism that miners doing ‘real work’ may find
incentives to take actions out of alignment with those of the advertisers and publishers. This is an area
of active consideration but the MADnet Core is a consortium network and therefore the 51% attack
sufficient to serve ads that fail to match the advertiser and publisher ruleset intersection would be a
transparent and corrective measures would be handled at the level of the Adledger consortium.
Alternatively, nodes might find throughput efficiencies in ways that advertisers or publishers felt
unfavorable; however, this can be addressed by adding additional rules to the publisher and advertiser
rulesets to restrict the unfavorable matches from the feasible ruleset intersection. While practical
implementation challenges are expected, incentives within the consortium are sufficiently well aligned
to support proof-of-real-work for decentralized ad serving.
MADNET DATA - Decentralized Data Management Platform (DMP)
MADnet Data is a decentralized Data Management Platform (DMP) charged with the governance
and accounting of data usage within the MADnet Core. Miners verifying matches between
advertising campaigns and ad requests from publishers do so using 1st, 2nd and 3rd party data.
MADnet Data provides data rights management ensuring that value add data providers
contributions are accounted for and invoice-able via MADnet Books.
Existing data management platforms can connect with MADnet Core via an application
programming interface (API) to provide targeted information for the serving of ads. This function
will later be replaced by MADnet Data, an extension of MADnet Core and a decentralized DMP that
captures information from the use of MAD Network and allows peers within the network to
We are experimenting with the use of homomorphic encryption to power atomic data swaps for
one-time-use data exchange. Impressions can ideally be served to a user without anyone knowing
the true identity of a user or their information. This prevents third parties from taking data and
selling it to competitors, and provides publishers with a vehicle to monetize their data without losing
sole possession of it. This results in an efficient market for data exchange and allows for true price
discovery of users, impressions and their associated data.
The MADtoken serves several purposes:
- Acts as a “software license” that activates a payment channel for the accounting,
fulfillment and reconciliation of ad delivery
- Incentivizes participant behavior to be aligned with the benefit of the network
- Bootstraps the long-term development of the MAD Network
The MADtoken is the exclusive way for network participants to access the features of MADnet
Books, the decentralized payment rail powering the ecosystem. Advertisers stake the MADtoken in
Insertion Orders, which are smart contracts that specify how ads should be executed. Each Insertion
Order produces an equivalent amount of MADcred, the only acceptable payment method within the
The MADtoken is an ERC20-compatible token, meaning it will easily integrate with existing
decentralized infrastructure including wallets, exchanges and smart contracts.
Adam Helfgott, Project Lead
Adam is a CTO and serial tech entrepreneur. As the co-founder and CEO of MadHive, Adam
conceptualizes and builds OTT ad tech with a blockchain architecture. Adam has worked
directly on multiple blockchain projects and has held strategic advisory positions within several
leading blockchain and media companies including Gem and IMG/WME.
Tom Bollich, Lead Architect
Tom is an entrepreneur in the technology space, particularly in “gamification of economies.”
Before advising various Fortune 500 companies on “gamification,” he was a founding team
member and studio CTO at Zynga. Tom has been at the forefront of many disruptive trends we
now see as commonplace, including gamification, online casinos, real-time labor and even
Konstantin Richter, Token Strategist
A serial entrepreneur in the SaaS media space, Konstantin is an advisor to leading blockchain
companies like Gem, ShoCard and Po.et. He is the co-chair of the advertising consortium
AdLedger and CEO of Blockdaemon.
Chris Powers, Project Manager
Chris is a vice president at BTC Labs, a venture studio building a suite of decentralized
applications for forward-thinking media companies. He previously spent eight years in
Shanghai consulting for investment banks and mutual funds on the Chinese capital markets
before joining ICOAGE, the world’s largest ICO platform, as Director of International Markets.
January 2015 - MadHive Team first ideates and conceptualizes blockchain solutions for the ad tech industry
April 2016 - MadHive Launches
August 2016 - MadHive completes first round of seed funding
BLOCKCHAIN AND AD TECH
September 2016 - First ad tech blockchain POC
February 2017 - Team begins developing a centralized ad server with hashed data
June 2017 - Tegna becomes MadHive's first paying customer
June 2017 - MadHive leads the first inaugural meeting of AdLedger
August 2017 - MAD Network hires its first Lead Blockchain Engineer
November 2017 - MAD Network Contribution Period
MAD NETWORK POC
Janurary 2018 - Grow the MAD Network development team
April 2018 - Launch centralized version of MADnet Books with full transparency
MAD NETWORK LAUNCH
August 2018 - Launch centralized version of MADnet Core compatible with MADnet Books
November 2018 - Introduce MADtoken economy within MADnet Books