Thread by @ChainLinkGod

1/ A new blog post by @chainlink was just published on $LINK staking

Lot’s of new information was presented, including a roadmap and initial implementation details

In this thread, I’ll break down what you need to know 👇
blog.chain.link/chainlink-stak…

2/ First it’s worth setting some context, as staking is a broad term in crypto

Chainlink Staking introduces a new layer of cryptoeconomic security by applying rewards and penalties to incentivize the network’s proper operation

3/ With #Chainlink Staking, there are four long-term goals

These serve as guiding principles in its development and as the pillars on which the success of staking will be defined

4/ Goal one: Increase the cryptoeconomic security and user assurances of Chainlink services

$LINK tokens are locked up, and if an oracle network misperforms, that $LINK stake can be slashed (taken away) and redistributed to the affected users

Attacks become more expensive

5/ Goal two: Enable community participation in the Chainlink network

Both node operators and regular tokenholders can directly participate in staking

This includes being rewarded for raising alerts if an oracle network misperforms

Token and community are very much needed

6/ Goal three: Generate sustainable rewards from real long-term use

Native token emissions in $LINK will create an initial base level of rewards for stakers

Over time, a greater portion of rewards will be sourced from user fees and other non-emission based sources

7/ Goal four: empower node operators to access higher-value jobs by staking

As node operators approach parity in terms of performance, they will begin to compete for jobs and revenue by how much $LINK they can stake

This results in a highly robust reputation system

8/ With these goals in mind, it’s important to note that Chainlink staking will evolve over time

The initial implementation planned for later this year will be focused on creating a simple and secure foundation

This allows feedback to be collected and assumptions to be tested

9/ The rollout of staking will be very similar to rollout of previous services

Price Feeds started with a single feed run by 3 nodes and scaled to a thousand feeds across 12 chains and supported by 50 nodes

This allows risks and opportunities to be identified before scaling up

10/ Following this approach, staking will evolve across multiple versions

As a first, @chainlink provided a roadmap detailing the prioritization and release milestones for each version 👀

11/ Chainlink Staking v0.1 is the version that will be released later this year

While staking v1 and v2 will be subsequent releases

Naturally, much of the specific details in the blog are focused on the v0.1 release and how it will evolve

12/ The initial v0.1 launch will focus on introducing a reputation framework and alerting system, key requirements for slashing in v1

To ensure robustness, these systems will track the performance of the $ETH/USD Data Feed on Ethereum Mainnet

13/ Importantly, stakers can raise an alert and get rewarded if they detect the $ETH/USD feed has not met the conditions of its SLA agreement

These alerting conditions will initially be around uptime, but expand in scope in later versions

14/ Once an alert is raised, an adjudication smart contract will verify the SLA conditions were breached

Afterwards, a reward to the alerter will be issued and results of the alert fed into the reputation systems

At-fault node operators will have their reputation updated

15/ In staking v1, the reputation system will expand to track a greater number of key metrics around the performance of node operators

Additionally in v1, slashing will be introduced to increase the penalties for an oracle network breaking the SLA agreement’s terms

16/ Now onto the juicy details; participation and rewards

The initial staking pool in v0.1 will be capped in size with distinct allotments:

1. Node operators
2. Community members
3. Coordinator of oracle networks

This means tokenholders will be able to stake directly

17/ The pool size in v0.1 will start at 25M $LINK, with the goal of scaling to 75M $LINK in the months after launch

With future versions, the pool size further increase in size and expand to additional Data Feeds and oracle services

18/ To fill the community allotment, a fair entry mechanism will be used

Emphasis is given that long-term token holders will be prioritized 👀

Node operators who service Data Feeds will have their own allotments to fill, with a third-party delegation system being explored

19/ Stakers participating in v0.1 will have their $LINK locked until at least the release of v1

With v1, stakers can choose commitment periods of varying lengths

20/ Initial emissions based rewards available to stakers in v0.1 will target an annualized reward rate of up to 5%

With v1, annualized rewards will vary based on user fees and the length of the commitment period

Longer commitment periods will earn a greater share of rewards

21/ Additionally, stakers in v0.1 will be eligible to earn benefits from the Partner Growth Program (PGP)

#Chainlinked projects will provide various benefits to stakers in order to accelerate their growth and align incentives

An initial release in v0.1, full release in v1

22/ As staking transitions to v1, user fees will begin to be shared with stakers

This coincides with the introduction of slashing and the cryptoeconomic security it provides

Loss protection is also being explored for v2, serving as an additional source of rewards

23/ So in summary, Chainlink Staking will be evolve over multiple releases

First starting with solid foundation and then introducing additional functionalities as the the system becomes more proven

This is how #Chainlink scales to becoming a global standard

24/ Staking is truly the start of a new era for $LINK tokenomics and long-term cryptoeconomic security

I’ve only scratched the surface with this thread, I highly recommend you dive into the blog post to learn more

Lots of information to absorb

25/ Shameless end-tweet promotional plug

If you enjoyed this thread, give it a like and retweet to help break down the information asymmetry

https://twitter.com/ChainLinkGod/status/1534309981507534848