The Chainlink Economics 2.0 Staking Protocol and Staking v0.1 Launch Details
They’re excited to announce that the beta of Chainlink Staking (v0.1) is planned to go live on Ethereum mainnet on December 6, 2022 at 12PM ET. Addresses that qualify for Early Access will have the opportunity to stake up to 7,000 LINK in the capped v0.1 staking pool. The capped v0.1 staking pool will then open to General Access two days later on December 8, 2022 at 12PM ET, at which point anyone will have the chance to stake up to an initial limit of 7,000 LINK per address, subject to the initially limited 25M LINK pool cap and other applicable participation requirements.
Staking is a core initiative of Chainlink Economics 2.0, enabling LINK token holders and node operators to earn rewards for helping increase the cryptoeconomic security of oracle services. The following blog post will provide greater insight into the underlying pool design and initial parameters outlined in Chainlink Staking v0.1. Learn more about Economics 2.0 in this recent keynote at SmartCon 2022.
Staking v0.1 Pool Design Overview
Chainlink Staking is a cryptoeconomic security mechanism in which stakers commit LINK tokens in smart contracts to back certain performance guarantees around oracle services. For a deeper understanding of Chainlink Staking, refer to the Chainlink Staking roadmap to learn more about the long-term goals and progression of Chainlink Staking.
To briefly recap, the first phase of Chainlink Staking is a beta release (referred to as v0.1), which will consist of a staking pool that supports the ETH/USD Data Feed on Ethereum mainnet. Stakers will earn rewards for helping secure the Data Feed, specifically by participating in a decentralized alerting system that flags if the Data Feed has not met certain performance requirements regarding uptime.
The staking pool will initially be capped at 25M LINK, representing approximately 5% of the current circulating supply and 2.5% of the total supply, with plans to scale up to 75M LINK over time. The staking pool will initially contain only two types of stakers: Node Operator Stakers and Community Stakers, with additional types of stakers being possible in the future. Node operators actively servicing Chainlink Data Feeds will each have an initial 50,000 LINK allotment.1
Node operators may opt to create or use a third-party delegation system that allows their 50,000 LINK allotment to be filled by LINK token holders from the Chainlink community. Third party and unofficial delegation systems should be viewed as an experiment that are independent from the Staking v0.1 beta.2
In order to determine which community members get access to the limited pool space, a fair-entry mechanism was created that provides qualifying addresses with an opportunity to obtain Early Access into the capped v0.1 staking pool. Community members who qualify for Early Access will have the opportunity to stake up to 7,000 LINK in a first-come, first-served manner until the current cap for the community allotment is reached. Once the Early Access period ends, any LINK token holder who meets the applicable participation requirements can stake up to an initial 7,000 LINK per address limit in the v0.1 staking pool until the current cap for the community allotment is reached.3
When v0.1 launches, 22.25M LINK will be allotted for Community Stakers on a first-come-first-serve entry, while 2.75M LINK will be allotted and reserved for Node Operator Stakers. Over time, as the space-limited pool expands, the proportional difference between different staking allotments may be adjusted to further enhance the security of the pool.
Due to the security parameters of the Staking system, both Node Operators and Community Stakers will initially have their staked LINK and accumulated rewards locked up in a smart contract until a future release of Staking. Research and development is already underway for a Staking version featuring migrations and unlocking, which is tentatively planned for release approximately 12 to 24 months after the launch of v0.1.
It’s important to note that Chainlink Staking is an early and evolving design that will launch across multiple phases. Note that v0.1 has initial beta parameters only, which may be changed in later versions, such as varying rates and the metrics/methods for determining reward rates, meaning the long-term design is still fluid in order for improvements and adaptations to be made that account for feedback and unforeseen changes in the Chainlink Network’s design/needs and the wider Web3 industry. As such, Staking v0.1 plays a crucial role by allowing for the testing of parameters, serving as a valuable opportunity to collect data and learn more about how cryptoeconomic security in the Chainlink Network can evolve to meet the needs of users.
With the goal of increasing cryptoeconomic security, Staking v0.1 is focused on introducing decentralized alerting capabilities—a foundational component for creating a slashing mechanism in a future Staking release based on properly incentivized rewards and penalties. The alerting mechanism allows stakers to raise a flag if they observe an event where the oracle service has not met certain predefined performance standards. If the alert is valid, the alerting staker will earn an alerting reward.
In v0.1, stakers can raise a valid alert on the ETH/USD Data Feed on Ethereum mainnet if a new oracle report has not been submitted on-chain for more than three hours since the previous on-chain update. This condition serves as the initial parameter for validating the design of alerting in v0.1.
Node Operator Stakers will start out with priority in alerting, with the ability to raise a valid alert in the first 20 minutes (aka “Priority Period”) if it has been more than three hours since the latest on-chain oracle report. Node operators are initially given priority as they’re the ecosystem participants with the most experience monitoring feed performance and already operate robust infrastructure.
Once the Priority Period has ended, any staker can raise an alert if a valid alert has not yet been raised. Once the first valid alert for the feed has been raised, any additional alerts raised during the same downtime event will be invalid. This alerting mechanism is designed to incentivize timely alerts while minimizing constraints on blockchain network bandwidth.
Alerts can be raised by directly interacting with the Staking v0.1 smart contract or via a Staking frontend. Because oracle reports are submitted on-chain, the v0.1 smart contract will automatically adjudicate the validity of any alert by checking the time between the alert and the last on-chain update. Invalid alerts (i.e. if the downtime threshold is not met) will result in reverted transactions while valid alerts will enforce penalties as described in a later section.
In exchange for raising the first valid alert during v0.1, stakers can earn up to 7,000 LINK in alerting rewards.4 Alerting conditions and rewards may evolve in future Staking releases, which can include adjusting the downtime threshold and introducing other alertable performance metrics on a per-feed basis.