[Chainlink] Chainlink Economics 2.0 Staking Protocol and Staking v0.1 Release Details

We are excited to announce that the Chainlink Staking (v0.1) beta is scheduled to go live on the Ethereum mainnet on December 6, 2022 at 12:00PM ET. Addresses eligible for early access will have the opportunity to stake up to 7,000 LINK in v0.1’s capped staking pool. The capped v0.1 staking pool will open to general visitors two days later on December 8, 2022 at 12:00PM ET, at which time anyone will have the opportunity to stake the initial limit of 7,000 LINK per address, subject to Subject to an initial limited 25M LINK mining 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 be rewarded for helping to improve the cryptoeconomic security of oracle services. The following blog post will provide a more in-depth look at the underlying pool design and initial parameters stipulated in Chainlink staking v0.1. Learn more about Economics 2.0 at the recent SmartCon 2022 keynote.

Chainlink Economics 2.0Chainlink staking is a key component in the Economics 2.0 framework.

Staking v0.1 mining pool design overview

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Chainlink staking is a cryptoeconomic security mechanism in which stakers commit LINK tokens in smart contracts to support certain performance guarantees around oracle services. For a more in-depth look at Chainlink staking, see the Chainlink staking roadmap to learn more about Chainlink staking’s long-term goals and progress.

As a brief recap, the first phase of Chainlink staking is a beta release (called v0.1), which will include a staking pool that supports ETH/USD datafeeds on the Ethereum mainnet. Stakers will be rewarded for helping to secure data feeds, notably by participating in a decentralized alert system that flags if a data feed fails to meet certain performance requirements regarding uptime.

The staking pool will initially be capped at 25 million LINK, approximately 5% of the current circulating supply and 2.5% of the total supply, and plans to expand to 75 million LINK over time. The staking pool will initially contain only two types of stakers: node operator stakers and community stakers, and may include other types of stakers in the future. Node operators actively serving the Chainlink data feed will each receive an initial allocation of 50,000 LINK. 1

Chainlink Staking AccelerationChainlink staking pools are expected to accelerate as usage increases.

Node operators may choose to create or use a third-party delegation system that allows their 50,000 LINK quota to be filled by LINK token holders from the Chainlink community.Third party and unofficial delegation systems should be considered experiments independent of staking v0.1 beta.2

To determine which community members have access to the limited pool space, we created a fair entry mechanism that provides eligible addresses with a chance to get early access to the capped v0.1 staking pool. Community members who qualify for early access will have the opportunity to stake up to 7,000 LINK on a first-come, first-served basis, up to the current community quota cap. After the early access period ends, any LINK token holder who meets the applicable participation requirements can limit an initial 7,000 LINK per address in the v0.1 staking pool, up to the current cap of the community allocation. 3

The three sets of eligibility criteria for v0.1 Early Access are listed below. Early access offers the opportunity to stake, but given the initial pool size cap, there is no guarantee someone will get a slot.

standard detail
holding le Token holders who fall into either category:

  1. Hold more than 7 LINK on the Ethereum mainnet for at least 50% of the time between May 30, 2019, and June 7, 2022.
  2. Hold more than 7 LINK on the Ethereum mainnet for at least 90% of the time between August 5, 2021 and June 7, 2022.
builders Teams participating in any Chainlink-hosted hackathon from Fall 2020 to Spring 2022.
educator Chainlink advocates, developer experts, and others who visibly host or speak about the Chainlink network or the Chainlink ecosystem at Chainlink meetups.

Community members can check their early access eligibility today at staking.chain.link using the Web3 wallet provider. To learn more about the mechanics of fair entry, including the rationale and methodology behind the Early Access eligibility list, see the following blog post.

check your eligibility

When v0.1 is released, 22.25 million LINKs will be allocated to community Stakers on a first-come, first-served basis, while 2.75 million LINKs will be allocated and reserved for node operator Stakers. Over time, as the space-limited pool grows, the proportional difference between the different staking allocations may be adjusted to further enhance the pool’s security.

Due to the security parameters of the staking system, node operators and community Stakers will initially lock their staking LINK and accrual rewards in smart contracts until future staking. A staking version with migration and unlocking features is already in development and is tentatively scheduled for release approximately 12 to 24 months after the v0.1 release.

It’s worth noting that Chainlink staking is an early, evolving design that will be rolled out in multiple stages. Note that v0.1 only has initial beta parameters which may change in later versions, such as different fee rates and metrics/methods to determine reward rates, meaning the long-term design is still fluid for improvements and Adaptation takes into account feedback and unforeseen changes in the design/requirements of the Chainlink network and the wider Web3 industry. As such, staking v0.1 plays a vital role by allowing parametric testing as a valuable opportunity to gather data and learn more about how cryptoeconomic security in the Chainlink network evolves to meet user needs.

alarm mechanism

To improve the security of the crypto-economy, staking v0.1 is focused on introducing decentralized alerts — a foundational component for creating slashing mechanisms based on appropriate incentive rewards and penalties in future staking releases. An alerting mechanism allows stakers to flag when an oracle service is observed not meeting some predefined performance criteria. Alert stakers will be rewarded for alerting if the alert is valid.

In v0.1, stakers can effectively alert on the ETH/USD datafeed on the Ethereum mainnet if no new oracle reports have been submitted on-chain for more than three hours since the last on-chain update. This condition was used as an initial parameter to validate the alert design in v0.1.

Node operator Stakers will prioritize alerts, being able to issue valid alerts in the first 20 minutes (also known as the “priority period”) if more than three hours have passed since the latest on-chain oracle report. Node operators are initially given priority because they are ecosystem participants, have the most experience monitoring feed performance, and are already running a robust infrastructure.

After the priority period ends, any staker can raise an alarm if a valid alarm has not already been issued. Once the first valid alert is issued by a feed, any other alerts issued during the same downtime event will become invalid. This alert mechanism is designed to incentivize timely alerts while minimizing constraints on blockchain network bandwidth.

Alerts can be raised by interacting directly with the staking v0.1 smart contract or via the staking frontend. Because oracle reports are submitted on-chain, the v0.1 smart contract will automatically judge 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 cause the transaction to be reverted, while valid alerts will enforce penalties, as described in a later section.

As the first exchange to issue a valid alert during v0.1, stakers can earn up to 7,000 LINK in alert rewards. 4 Alert conditions and rewards are subject to change in future staking releases, which may include adjustments to downtime thresholds and the introduction of other alertable performance metrics on a feed basis.

automatic delegation

In v0.1, the staked LINK from node operators serves as a direct quantitative commitment to their performance, while community stakes add an extra layer of incentives for node operators’ honest and reliable performance. All node operator stakers in v0.1 will receive a fraction of the community staker’s staking rewards – called the delegation reward – provided the node operator performs services on behalf of the community stakers (i.e. performs oracle computation for the data feed ).

The design is similar to existing stake-based delegation designs in that rewards from community stake are used to further increase network security through economic federation of node operators. Community Stakers in v0.1 will see their stake automatically delegated to Node Operator Stakers without the Node Operator needing to control the community stake. This mechanism is called “auto-delegation”.

Community stakers will start having their staked LINK automatically and equally delegated to all actively staked node operators in order to validate the automatic delegation design during the initial v0.1 testing phase, allowing node operators to start on equal footing and then earn higher The reputation scheme for future staking versions of the system has been implemented. Auto-delegation drives a dynamic where the more community stake there is in a v0.1 pool, the greater the incentive for node operators to perform reliably, since higher delegation rewards are paid to node operators.

In future staking versions, Auto-Delegation may evolve into a dynamic mechanism. In this design, community rights will be automatically delegated to active staking node operators based on reputation indicators such as historical performance and the length of time LINK has been staked. Quantities vary. pledged amount.

Staking Rewards and Penalties

Community engagement through staking is a key component of Economics 2.0, and rewards will be established to fairly incentivize early participants to contribute to the growing cryptoeconomic security of the Chainlink oracle network. Staking rewards and alerting rewards in v0.1 will be backed by native LINK emissions to create an initial reward baseline for stakers. However, the long-term goal is for token issuance-based staking rewards to taper off over time and be replaced by other reward sources, as described below. 5

node operator striker

Node operator Stakers are expected to earn a 5% base rate on their pledged stake in LINK, as well as a 5% delegation fee reward from community Staker rewards. Assuming a fully filled 25M LINK mining pool, node operator Stakers can earn an effective annualized reward rate of about 7%.

The total annual reward for node operator stakers will depend on the number of LINK staked by the node, the total amount of community stakes, and the number of active node operators. 6 As mentioned earlier, the dynamic version of auto-delegation has a mechanism introduced in later staking versions that may adjust the amount of delegation to Node Operator Stakers based on their reputation.

During v0.1, Node Operator Stakers will not see their committed stake cut. However, node operators currently providing ETH/USD data feeds on Ethereum can have up to three months’ worth of accrued staking rewards slashed if valid alarms are issued due to prolonged downtime. During v0.1, active staking node operators not serving the ETH/USD Ethereum data feed will not see their rewards slashed. Stake slashing is planned for a future version of staking.

community stakeholders

In v0.1, the community stake portion of the mining pool projects a base interest rate of 5% per annum on LINK to help protect the committed stake in the Chainlink network. From these annualized rewards, 5% of the Community Staker rewards are expected to be distributed directly to Node Operator Stakers as delegation rewards. The result is an annualized effective reward rate of 4.75% for community stakers in v0.1.8. This effective reward rate was chosen to balance the requirements of economic sustainability while still rewarding stakers fairly for helping secure the Chainlink network.

The delegation rate of 5% is used as an initial parameter to test the effectiveness of this part of the system. In future staking versions, the delegation rate may be adjusted according to the results of further research, development and v0.1. Additionally, the baseline 5% annualized reward rate reflects the initial cap size of v0.1 staking pools, rewarding early active participants who join v0.1. Note that staking LINK and staking rewards earned in the Community Staker quota will not be penalized or slashed in staking v0.1.

User Paid Rewards

One of the main goals of Economics 2.0 is to start a new chapter in Chainlink’s value capture and cryptoeconomic security. The Chainlink staking v0.1 beta will test how various stakers who support the operation of the Chainlink oracle service receive staking rewards.

To help ensure the long-term sustainability of the Chainlink network, user fees for access to the Chainlink ecosystem will be used to offset node operating costs and reward other key ecosystem participants. In future versions of Chainlink staking, this user fee economic model is expected to be expanded, enabling different types of stakers to earn different percentages of fees for their services.

This approach is in line with the long-term goal of emission-based staking rewards dwindling over time and replaced by non-emission-based sources of user fee rewards that are shared among key participants in protocol security. As the Chainlink ecosystem continues to grow, so does the economic model for user fees.

Chainlink Creates Incentives for Stakers

In addition to the above rewards, stakers in v0.1 may also be eligible for additional rewards, depending on each project’s eligibility, which will be offered through the Chainlink BUILD program in future staking releases. The Chainlink BUILD program aims to accelerate the development of early and mature projects in the Chainlink ecosystem by offering better Chainlink services and technical support in exchange for fee commitments and other incentives to Chainlink service providers such as stakers.

Projects confirmed to participate in the Chainlink BUILD program include Krypton, Interest Protocol, Mycelium, Cask Protocol, Truflation, Dolomite, Space and Time, Galaxis, bitsCrunch, and ChainML, with more expected in the future. These projects have committed a portion of their total token supply to Chainlink BUILD, usually between 3% and 5%. Over time, parts of the plan will be made available to Community Stakers, Node Operator Stakers, and other key community participants to help secure the oracle services that BUILD participants rely on, the scope of which may be extended to other feeds and services. Part of the BUILD reward may depend in part on reputation metrics such as stake amount, stake length, and other key metrics.

Chainlink buildChainlink BUILD accelerates the growth of Web3 projects by providing access to Chainlink services and technical support in exchange for a portion of their total token supply.

reputation system

As an additional component of Economics 2.0, one of the long-term goals of staking is to establish a robust reputation framework for how nodes are selected to participate in a decentralized oracle network. As such, staking metrics will be introduced in the initial reputation system during staking v0.1 as a way to improve tracking of individual node operator performance and data feed performance in general. Over time, the reputation system incentivizes node operators to maintain a high level of performance, laying the groundwork for the introduction of clearer incentives for the development of automatic delegation mechanisms in future staking releases.

Node operator reputation metrics including latest answers and corresponding timestamps are available today to track the general performance of node operators serving data feeds. Additional metrics for node operators will be tracked over time, such as:

  • Node Staking – The amount of LINK staked by a particular node operator and the length of time it is staked.
  • Node Reporting Rate – The percentage of on-chain oracle reports containing observations by a particular node operator.
  • Failure Alert Events – The number of active alerts that can be attributed to performance failures by a specific node operator on Chainlink staking-backed feeds.

The reputation metrics tracked by the program will continue to be refined over time based on feedback and additional research, as reputation will play an increasing role in determining future reward opportunities, such as job selection. Note that while third-party reputation systems may exist and provide useful information about node and network performance, only the Chainlink reputation system is directly connected to network operations and rewards. For future staking releases, it is being explored how the reputation system can be extended to a wider group of participants beyond node operators, including community Stakers for their role in sounding useful alerts.

in conclusion

The upcoming release of Chainlink Staking v0.1 is an inflection point for the security and economic design of the Chainlink network. Combined with other key Economics 2.0 initiatives such as Chainlink BUILD and Chainlink SCALE, the Chainlink ecosystem is entering the next phase of sustainable growth, improving cryptoeconomic security and capturing a whole new level of value across the network.

Chainlink Economics 2.0Chainlink Economics 2.0 is a new era of sustainable growth, cryptoeconomic security, and deeper value capture for the Chainlink network.

Check now to see if you qualify for Chainlink staking v0.1 early access. To learn more about Chainlink staking and economics 2.0, check out the following resources:

  • Chainlink Staking Roadmap
  • Chainlink Staking v0.1 Early Access Eligibility
  • Chainlink Economics 2.0

footnote

1. If you choose to participate in v0.1, the minimum stake requirement for Node Operator Stakers is 1,000 LINK.
2. The Chainlink Foundation does not guarantee the performance or security of third-party delegation systems created or used by node operators or other ecosystem participants.
3. If you choose to participate in v0.1, the minimum pledge requirement for community stakers is 1 LINK.
4. Valid reminders from the node operator Staker within the priority period can get 7,000 LINK. Any staker who makes a valid alert after the priority period can earn a quarter of their staked amount, up to a maximum of 7,000 LINK, according to the following formula: min(7,000, 0.2 * staked_link).
5. The introduction of non-emissions based incentives for stakeholders depends on a number of factors, including the general adoption and revenue of Web3 applications.
6. The annualized total reward that a Node Operator Staker can obtain is: (node_staked_LINK * 0.05) + (total_community_stake * 0.05 * 0.05 / num_node_staking), assuming the variable remains constant.
7. Once a valid alert is issued, reward penalties for operators of actively staked nodes serving ETH/USD Ethereum data feeds are as follows: min(node_net_accumulated_rewards, (0.05 * min_required_node_stake / 4 + three_months_delegation_rewards)).
8. The 5% annualized total reward minus the 0.25% delegation reward (5% of 5%) results in an effective reward rate of 4.75% for Community Stakers.

Disclaimer: This post is for informational purposes only and contains statements about the future, including anticipated programs, products and features, development and timelines for the introduction of these new products and features. These statements are only predictions and reflect current beliefs and expectations regarding future events; they are based on assumptions and are subject to risks, uncertainties and changes at any time. The Chainlink Eligibility Application is provided “as is” without warranty of any kind. Eligibility does not guarantee your participation in the Chainlink staking program. Staking eligibility and participation requirements are subject to change without notice. There can be no assurance that any anticipated plans, products or features will be implemented as specified or not at all, or that actual results will not differ materially from those expressed in these statements, although we believe they are based on reasonable assumptions. All statements are valid only on the date of initial posting and we may not update this post in response.

Information source: compiled by 0x information from AZCOINNEWS.Copyright belongs to the author Chainlink News, without permission, may not be reproduced

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