As the crypto economy expands, so does the need for a robust and trustworthy blockchain. In addition, the deployment of smart contracts and the need for reliable price feeds make the need for sustainable oracle networks a fundamental requirement for many blockchains. This gap is anticipated to be filled by Chainlink’s new staking mechanism, a decentralized blockchain oracle.
Purpose Behind Chainlink Staking
Chainlink has set four goals to achieve from its new Staking mechanism that will also work as four pillars for the Chainlink ecosystem.
- Enhance the Security of Crypto economic and reliability of its services
- Land More Participation on The Chainlink Network
- Improve remuneration for Node Operators from staking
- Generate Impressive Reward for Stakers
Launch of Chainlink Staking
Chainlink staking will partially roll out through different versions to measure the risk and possible opportunities associated with the staking mechanism. The launch of Chainlink Staking will follow the footsteps of the Chainlink Price Feed.
Chainlink Price Feed initially began with a single ETH/USD Price Feed on Ethereum operated by three oracle nodes. This has now grown to a thousand Price Feeds powered by 50+ leading node operators across twelve blockchains and layer-2 solutions.
The initial version of Chainlink Staking v0.1 has been scheduled for this year. This version will introduce a reputation framework and staker alerting system. After the assessment and community feedback of v0.1, a new evolved version v1 will be rolled out with more functionality and capability.
The new functionality of v1 will contain the slashing of stake to fortify crypto economics and the addition of user fees as rewards.
The final version of Chainlink Staking v2 will be presented with the full functionality with the induction of loss protection as well as expansion of the new services.
Functionality of Different Versions
- Chainlink Staking v0.1
Various functions of the v0.1 includes:
- Link Staking Rewards
- Partner Growth Program
- Basic Reputation Tracking
- Alerting Network
- ETH/USD Feed
- Chainlink Staking v1
Various functions of the v1 includes:
- All Previous Version (v0.1) Capabilities
- Stake Slashing
- User Fee Rewards
- Node Delegation
- Advanced Reputation Tracking
- Expanding to More Feeds
- Chainlink Staking v2
Various functions of the v2 includes:
- All Previous Version (v1) Capabilities
- Expanding to More Services
- Loss Protection
How does the Reputation and Alerting System Work?
The reason behind the integration of the Reputation and Alerting System in v0.1 is to fulfill the requirements of slashing and other functionalities of the forthcoming versions of Chainlink Staking.
Furthermore, it will also be used to track the performance of the ETH/USD Price Feed on the Ethereum mainnet to examine the flexibility of the in-production environment.
Stakers will be able to raise an alert about ETH/ USD feed and get a reward with the initial version of chainlink staking. To claim alerting reward, stakers must prove the valid detection of ETH/USD feeds that sync out of the SLA agreements.
To Do So –
- After an alert is raised, a smart contract will verify that the conditions of the smart contract SLA were breached or not.
- If the smart contract finds a valid alert, then the alarm raiser will get a reward after sometime.
- This authenticated alert will be fed into the reputation system to inform and update the individual reputation of the at-fault node operators.
Chainlink Staking v1 will have more key metrics around the performance of node operators. It will help to put the trust of the people in the Chainlink network.
Participation in Staking
In the Chainlink Staking v0.1, the staking pool will have a limited module to offer distinct allotments to node operators, community members, and the coordinator of oracle networks.
The initial staking pool size will have 25M LINK tokens, which will gradually be enlarged to 75M LINK tokens in a month depending on the demand. Future plans include expanding the pool’s capacity, integrating more data inputs, and adding Oracle services.
The special entry mechanism will be used to check the authenticity of the participation from the different community members. The mechanisms will prioritize long-term token holders, who have a high chance to actively participate in the alerting mechanism.
Furthermore, Node operators actively engaged in the service of Chainlink Data Feeds will get their own distinct allotments to fill. But, a third party delegation system is under testing and its integration is expected in the v1.
Most importantly, Stakers’ LINK tokens staked in v0.1 will be locked until the launch of v1. After the launch of v1, stakers will have the right to decide staking periods.
Also Read: What is Ethereum Staking?
For the Chainlink staking v0.1, stakers will be able to claim annualized staking rewards of up to 5%. This percentage will be varied after the launch of v1 based on user fees and the length of the commitment period.
The staking reward will be based on the commitment periods; the longer LINK tokens staked in the pool, the more rewards stakers will get.
Apart from the main staking reward, stakers in v0.1 will also get extra benefits from the Partner Growth Program (PGP). This program is rolled out along with Chainlink staking where Chainlink projects will boost their growth and align their economic incentives with the Chainlink community.
By doing this, Chainlink stakeholder can actively participate in the ecosystem of the project and accelerate adoption.