Thread by @ChainLinkGod

1/ #Chainlink Staking v0.1 is launching tomorrow (Dec 6th, 12PM ET) 👀

What does this mean and what does Staking v0.1 look like?

Let’s break it down frens 🧵

2/ Staking is a mechanism where tokens are locked up in smart contracts to increase the cryptoeconomic security of a protocol

For Chainlink, this consists of $LINK being locked up as collateral to back the performance of decentralized oracle networks

3/ While Chainlink networks are already secure, staking adds an additional incentives/penalties system on-top

Staking will roll out across stages, initially beginning with a v0.1 beta release (tomorrow)

Through an iterative approach, more functionality will be added over time

4/ As covered in depth in a recent blog, Staking v0.1 will help secure the ETH/USD data feed on the Ethereum mainnet

Stakers will participate in a decentralized alerting system to flag if the data feed has not met predefined performance requirements
blog.chain.link/chainlink-stak…

5/ The Staking v0.1 pool will be initially capped at 25M $LINK, which is 5% of the current circulating supply

There will initially be two types of stakers:

- Node Operator Stakers
- Community Stakers

6/ Each Chainlink node operator actively serving data feeds will be able to stake up to 50K LINK, with a minimum of 1K LINK if choosing to stake

Community stakers can stake up to 7K LINK, with a minimum of 1 LINK if choosing to stake

7/ For the community allotment of the pool, access to the v0.1 pool is split into two periods

Early Access: starting Dec 6th for addresses that are eligible based on predefined criteria

General Access: starting Dec 8th for any address wanting to stake

blog.chain.link/chainlink-stak…

8/ Entry into the community portion of the Community Staking pool will be first-come-first-served

Early Access Eligibility can be checked today at staking.chain.link (please don’t fall for scam links)

This is the same webpage where staking will take place

9/ Due to the security parameters of v0.1, staked $LINK and rewards during v0.1 will be locked until the subsequent release of Staking

Staking v0.2 is planned to release in 9-12 months, at which point v0.1 stakers can unlock their stake/rewards or migrate to v0.2

Context:

https://twitter.com/chainlink/status/1598149204240744448

10/ It is important to note that Staking is an early and evolving design that will evolve across multiple versions

Parameters in v0.1 may be changed in future versions based on feedback and v0.1 results (such as reward rates)

The long term design is fluid for changes to be made

11/ Now onto v0.1 functionalities

ALERTING

Stakers in v0.1 can raise an alert on the ETH/USD Ethereum data feed if it’s been more than 3 hours without an on-chain update

Node operator stakers will have a 20 minute priority period to raise alerts

12/ Once the priority period has been ended, any staker can raise an alert

Alerts will be adjudicated on-chain by a smart contract

The first valid alert of a fault can earn a staker up to 20% of their stake amount or 7K LINK, whichever is lower

13/ AUTO-DELEGATION

Staked LINK from node operators serves as a direct quantifiable commitment to their performance, while community stake adds a layer of incentivization

All Node Operator Stakers will earn a small portion of the Community Staker’s rewards (delegation rewards)

14/ Community Stakers will see their stake automatically delegated equally across all actively staking node operators

In the future, Auto-Delegation can turn into a dynamic mechanism where stake is delegated to nodes based on their reputation (performance, LINK staked, etc)

15/ REWARDS

To incentivize early participants for their contribution, staking rewards and alerting rewards will be supported by native LINK token emissions

The long-term goal is for rewards to be sourced from non-emission based sources like user fees

16/ Node Operator Stakers will earn a baseline rate of 5% per year against their staked LINK

Additionally they will earn rewards sourced from the 5% of Community Staker Rewards

Assuming an entirely full pool of 25M, that’s an effective annualized rate of ~7%

17/ Community Stakers will also earn a baseline rate of 5% per year against their staked LINK

From those rewards, 5% will go to Node Operator Stakers

The result is an effective annualized rate of 4.75%

18/ Community Stakers and Node Operator Stakers will not see their staked $LINK slashed during v0.1

However if a valid alert is raised, then up to 3 months of accured staking rewards can be slashed from node operators servicing the ETH/USD Ethereum feed

19/ User fees that enter the Chainlink ecosystem will be used to offset node operator costs, and in the future, a portion of user fees can flow to stakers

As the Chainlink ecosystem evolves, so will its economic system

20/ In addition to the above rewards, stakers in v0.1 will also be eligible to accrue BUILD rewards, dependent on per-project qualifications, which will be paid to stakers in a future release of staking

Learn more about Chainlink BUILD below:
blog.chain.link/chainlink-buil…

21/ REPUTATION SYSTEM

Reputation will play a key role in how nodes are selected to participate in oracle networks over time

v0.1 will introduce additional reputation metrics to track node performance

- Node stake amount
- Node report rate
- At-fault alertable events

22/ The reputation metrics by which nodes will be tracked will evolve over time based on additional feedback and v0.1 results

It will however play an important role in the network’s future

23/ It should also be noted that third-party liquid staking solutions like @stakedotlink also exists

15 nodes have combined their stake allotments, where stakers can get a liquid $stLINK token

Such systems are external to v0.1, Chainlink can’t guarantee its performance/security

24/ All put together, Staking v0.1 is the initial beta release of Chainlink Staking, which will continue to evolve over time

Any parameter may change in future versions as further research and development is done and feedback is collected

25/ This thread is just a summary of the Staking v0.1 design

If you want to learn more about Chainlink Staking, I highly recommend you read this recent Chainlink blog to learn more 👇
blog.chain.link/chainlink-stak…

26/ If you found this thread informative, like and retweet the first tweet in this thread 🙏

Remember that the official Chainlink Staking webpage is staking.chain.link

Good luck on getting into the pool and see you on the other side frens

https://twitter.com/ChainLinkGod/status/1599977452876750848