Chainlink (LINK) Launches Economics 2.0 and Staking v0.1

Chainlink (LINK) has announced the launch of its Staking v0.1 beta program on the Ethereum mainnet, scheduled for December 6th.

Staking is a core initiative within Chainlink Economics 2.0, designed to allow LINK token holders and node operators to earn passive rewards while enhancing the security of this leading oracle network.

Key Details on Staking v0.1

Eligible addresses can stake up to 7,000 LINK in the v0.1 pool. This pool will open for general access two days later, allowing anyone to participate with the same limit per address.

Overview of Staking v0.1

Chainlink Staking is an economic security mechanism where participants commit LINK to the network via smart contracts to improve the performance of oracle services.

The beta release v0.1 is the first phase of Chainlink Staking, featuring a pool supporting the ETH/USD trading pair data feed on Ethereum. By participating, users can earn rewards for flagging issues if the data feed fails to meet quality standards.

The initial staking pool is capped at 25 million LINK, representing 5% of the current circulating supply or 2.5% of the total supply, with plans to scale up to 75 million LINK. The initial pool will be divided between Node Operator Stakers (2.75 million LINK) and Community Stakers (22.25 million LINK). Each active node operator will be allocated an initial 50,000 LINK.

Access Mechanism for Staking v0.1

To manage community access, Chainlink has introduced a fair entry mechanism as shown below. Early Access members can stake up to 7,000 LINK on a first-come, first-served (FCFS) basis until the limit is reached.

Criteria for Early Access to Staking v0.1

To secure the system, staking rewards for both Node Operators and Community Stakers will be locked until the official staking launch, expected to occur 12 to 24 months after v0.1.

Alert Mechanism

This mechanism allows stakers to flag alerts if they detect discrepancies in oracle service performance. Valid alerts can earn stakers up to 7,000 LINK. The ETH/USD trading pair on Ethereum mainnet will be the first data source deployed.

Node Operator Stakers will have a 20-minute priority window. After this period, any staker can raise an alert if there is still no valid response.

Automatic Delegation

This feature is for Operator Stakers providing services on behalf of Community Stakers. LINK from Community Stakers is automatically delegated to Operator Stakers without the need for node operators to control the funds. This is why it’s termed “automatic delegation.”

Staking Rewards

• Node Operator Stakers: Expected to receive a base annual return of 5% on staked LINK, plus an additional 5% delegation reward from Community Stakers.
• Community Stakers: Expected to receive 5% annually on the total LINK staked in the network. From this annual reward, 5% will be transferred to Node Operator Stakers as an automatic delegation reward.

User Fee Rewards

To ensure Chainlink's sustainability, user fees from the ecosystem will cover node operation costs and reward other participants. This model will be expanded in the future to distribute profits to stakers.

Chainlink BUILD – Staker Incentives

In addition to the above rewards, stakers in v0.1 will accumulate additional incentives based on project milestones, provided through Chainlink BUILD in the future. This program aims to support the development of early-stage projects within the ecosystem, offering technical support and other incentives to service providers.

Reputation System

The reputation system is an integral part of Chainlink Economics 2.0, designed to establish and assess the performance of nodes on the oracle network. Key criteria include:

• Node Stake: The amount and duration of LINK staked by a specific operator.
• Node Reporting Rate: The percentage of oracle reports on-chain with specific observations.
• Alert Errors: The number of valid alerts assigned to performance errors of an operator on Chainlink Staking-supported data feeds.

The upcoming Staking v0.1 is crucial for Chainlink’s security framework. By integrating Economics 2.0 with Chainlink BUILD and Chainlink SCALE, the ecosystem is entering a phase of sustainable growth, enhanced security, and added value for the entire network.

Following this announcement, LINK has shown positive price movement, currently trading around $6.77, reflecting a market adjustment in response to the Fed's indication of a slower pace in interest rate hikes.

1-hour chart of LINK/USDT on Binance as of 11:15 AM on 11/24/2022