Thread by @Sinbua1

[ULTIMATE #LINKPOOL & $LINK STAKING THREAD ALERT]
Lately I couldn't help but notice how many discussions have arisen around Chainlink's staking, LinkPool, its value proposition and the dynamics at play. That is why I am creating this thread to clear up misunderstandings

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What is Chainlink Staking?
It is a cryptoeconomic security mechanism whose purpose is to mitigate counterparty risk between a smart contract and its end users. In other words, to make it so that I do not have to trust that a smart contract will be executed according to ...

the terms in which it has been coded, but that I simply have the cryptographic guarantee that it will happen that way. This implies that staking as most people know it thanks to the DeFi ecosystem (e.g. inflationary measures, liquidity mining, proportion of liquidity ...

in AMMs...) has absolutely nothing to do with Chainlink staking.

So where do the rewards in Chainlink staking come from?
Chainlink oracles provide oracle services (Chainlink Keepers, Price Feeds, VRF, PoR, DECO, FSS) and charge in $LINK in exchange for providing such services. Once staking is available, each oracle can decide ...

whether to provide access to retail LINK holders so that they can stake on their node, and will therefore distribute the payments for completing such Job Requests proportionally among the users who have provided their LINK as collateral.

Coinbase LINK staking
There are no DeFi mechanisms. This means that node operators will have to face a VITAL decision for the ecosystem: "do I allow others to contribute their LINK to my node and therefore I am forced to distribute part (or even all) of ...

the payment among the LINK stakers or do I obtain the LINKs in another way that is more profitable? Now think about Coinbase, one of the most established and longest running companies in the crypto industry, publicly traded, and with thousands ...

of Venture Capitals just a phone call away. See where I'm going? What makes you think that:
1. Coinbase will offer staking to LINK holders when they can surely get better terms from their VC friends and without having to offer explanations publicly in case there is ...

the slightest problem.
2. Coinbase will have access to the same opportunities as nodes like AlphaChain, Fiews or even Telkomm, which are OGs, and have been farming on-chain reputation since the beginning. Brand reputation belong to the past, only cryptographic proofs matter.

Special features of LINK staking
In addition, each oracle usually has a fully dedicated team behind it to manage infrastructure, logistics, engineering, DevOps, security and business development, as they carry the responsibility of decentralising the power that ...

oracles possess while providing the equivalent reliability guarantees of a Web2.0 infrastructure provider.

And yes, I mentioned the need for oracles to exercise business development, this is because Chainlink oracles operate as companies. Thus staking ...

LINK on a specific node means betting on the performance of that specific company, and on their ability to get different developers to trust them. Ultimately this means that staking on "node A" could be far more lucrative than staking on "node B".

This is why no one can "talk about the APY of LINK staking" in the same way that no one could predict what Amazon's revenue would be nowadays 20 years ago.

Deminishing point of returns
A Chainlink node completes Job Requests and is paid in $LINK for it. In the future there will be many (not all) Job Requests that will require any node that wants to respond to their request to deposit a specific amount of LINK as collateral. ...

The number of LINK needed to service all possible requests requiring a bond will be FINITE. This means that if we assume that the operator of a node is serving all possible Job Requests that require collateral, after a certain point, if the node operator continues to accept ...

more LINK, it will dilute the rewards of its users. After all, if you only need 1 million LINK as collateral and users contribute 2 million LINK without that increasing the Jobs payments, you have 1 million LINK deposited in your node that is not being used. ...

Therefore, as a node operator, the smartest thing to do is either what #Linkpool did, (to attach their staking allowance to a token that represents your staking rights on their node) or set a limited staking pool in order to enable a first-come first-serve service. That ...

means that either you are as fast as possible getting in or you pay for a token that grants you staking rights.

So what does @linkpoolio offer?
LinkPool is one of those node operators that has decided to accept $LINK liquidity from retail users and not only that, but they will do so in a trustless way, ensuring that it is through a decentralised, on-chain structure that will hold the ...

$LINK tokens. They have also suggested that they have created a system so that any Chainlink node can use their staking contracts in a decentralised way.

They have a token $LPL, what is it for?
The LPL token serves two purposes:

- Manage the amount of LINK you will be able to stake on LinkPool via a derivative token called linkLPLA (which represents your "seat" to the LINK staking pool).

- Company revenue sharing: LinkPool operates Market.link and NaaS.link in addition to future staking pools. All revenues are shared equally among the $LPL stakers.

So, do I have to buy the $LPL token to stake $LINK?
Not necessarily! If we take into account the limitation mentioned above (deminishing point of returns aka max cap of LINK staked) you have two options to stake LINK on LinkPool:

- Go to the linkLPLA Lending contract (you don't have to buy anything) just wait for the owner of some linkLPLA to give you his "seat" in exchange for a lender fee, and be faster than the rest of possible users waiting for a "free seat".

- Buy LPL, stake it in the LinkPool contracts and get your reserved seat in the LINK staking pool (linkLPLA).