The Tie Research
Chainlink Staking: v0.1 Roadmap
In our previous paper on oracles, we dove into the intricacies that make up these networks, both old and new. Among the oracles discussed was Chainlink, the decentralized oracle network whose Total Value Secured is currently sitting at $37.3bln, making it the current leader among blockchain oracle solutions by a landslide (Figure A).
Earlier this month, there was a blog post released by Chainlink regarding the highly anticipated staking implementation. The insights included in their article cover:
- The long-term goals of Chainlink staking
- Chainlink staking roadmap
- Overview of Chainlink staking’s initial implementation (v0.1)
This article aims to simplify the concepts mentioned in the Chainlink Staking Roadmap blog post
1. Crypto-Economic Security and User Assurances
Staking in the Chainlink Network is a crypto-economic mechanism that aims to increase the security and user assurances of Chainlink oracle services. This is accomplished by enabling LINK tokens to be locked up and used as a type of service-level guarantee around network performance. If an oracle network breaks the terms of the SLA agreement, then a portion of the network’s stake is slashed and redistributed.
2. Community Participation
Staking aims to empower Chainlink community members by enabling them to directly participate in securing the network alongside node operators by staking their LINK tokens. Stakers are also provided the opportunity to raise alerts and get rewarded if an oracle network does not meet its predefined performance standards.
3. Sustainable Rewards
Various sources of rewards will be provided to stakers, with native LINK token emissions setting an initial base level of rewards. As network usage increases, a greater portion of rewards can become sourced from non-emission-based sources such as user service fees and loss protection.
4. Higher Value for Node Operators
The last goal of Chainlink staking is to establish a reputation framework for how Chainlink nodes are being selected to participate in the network. In addition to performance metrics, such as response time and data accuracy, this framework will also include the amount of LINK each node is willing to stake to back their oracle services.
It’s important to reiterate that Chainlink takes a public good—data—and creates an open market for it, where nodes compete to securely relay data in return for user fees. In addition to the quality of service the node provides, the amount of revenue a node can bring in will also be tied to the amount of LINK they’re able to stake, creating a more aligned incentive structure where nodes have an incentive to compound their staking rewards.
Chainlink has long prioritized quality, security, and a long-term-oriented approach. For example, when Chainlink Price Feeds first went live in early 2019, they were rolled out in multiple phases. This began with a single Price Feed run by three nodes, and ultimately scaled to nearly a thousand Price Feeds powered by 50+ node operators across 13+ blockchains, supporting more than 1,300 projects with high-quality data and off-chain computation services. The same meticulous approach is being applied to staking.
While there isn’t an exact date yet, staking v0.1 has an intended launch period set for later this year, with the intention of establishing a solid foundation for a robust system. Once enough data has been collected from community feedback and product usage, v1 will launch, with v2 proceeding after it. Current plans for v1 include additional functionality like expanding methods to measure node performance, distributing user fee rewards to stakers, slashing, and more. (as shown in Figure B.)
Staking v0.1 Overview
The primary focus with v0.1 is to leverage a reputation framework and alerting system to create a robust incentive system. By incentivizing token holders and node operators to report a feed not meeting the predefined performance standards, the expected result is a system that provides the groundwork for increased security guarantees for end-users. Ultimately, v0.1 is the first stepping stone for achieving an enhanced explicit staking model via what’s described in Chainlink 2.0’s whitepaper as super-linear staking (or quadratic staking).
Specifics of v0.1 Launch
- The initial staking pool, tracking the performance of the ETH/USD Price Feed, will be capped at 25M LINK tokens with the intention of scaling up to 75M. As future phases roll out, the allocation size will grow along with available pools.
- The initial entry of participants will emphasize long-term community members and long-standing node operators.
- The base-level rewards will derive from native token emissions with an annualized target of up to 5%. Once v1 is released, the annualized rate will vary based on user fees and commitment length, where the longer a staker will choose to commit their stake, the greater the share of rewards they can receive.
- An initial version of the Chainlink Partner Growth Program (PGP) is set to launch alongside Chainlink staking. Stakers in v0.1 will be eligible to earn additional benefits with the support of ecosystem participants to align incentives and accelerate the growth of the Chainlink ecosystem.
- While limited in detail, loss protection is being looked at for v2 staking. Additional details on this should come as the implementation of staking progresses.
The Chainlink community has been waiting years for a solid roadmap and information on staking, apart from the foundations laid down in the Chainlink 2.0 whitepaper. The introduction of staking is an enormous step toward the increased reliability, scalability, and long-term security of Chainlink decentralized oracle networks. While it may be years until the roadmap is realized in its entirety, the Chainlink community has plenty of practice in applying patience to conviction.
This report is for informational purposes only and is not investment or trading advice. The views and opinions expressed in this report are exclusively those of the author, and do not necessarily reflect the views or positions of The TIE Inc. The Author may be holding the cryptocurrencies or using the strategies mentioned in this report. You are fully responsible for any decisions you make; the TIE Inc. is not liable for any loss or damage caused by reliance on information provided. For investment advice, please consult a registered investment advisor.
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