Staking is a core initiative of Chainlink Economics 2.0 that brings a new layer of cryptoeconomic security to the Chainlink Network. Staking enables ecosystem participants, such as node operators and community members, to back the performance of oracle services with staked LINK and earn rewards for helping secure the network.

Last December, the initial beta version of Chainlink Staking (v0.1) was released, consisting of a 25M LINK staking pool that supported the cryptoeconomic security of the ETH/USD Data Feed on Ethereum. Both Community Stakers and Node Operator Stakers in v0.1 earn staking rewards by participating in a decentralized alerting system around performance requirements. 

The next version of Chainlink Staking (v0.2) is on track to launch later this year in Q4, with an initial expanded pool size of 45,000,000 LINK. The launch of the v0.2 beta upgrade will progressively expand access to a broader scope of participants, starting with a Priority Migration period on November 28, 2023 at 12PM ET for existing v0.1 stakers before entering Early Access on December 7, 2023 at 12PM ET and then General Access on December 11, 2023 at 12PM ET. 

While v0.1 served as the initial Staking program, v0.2 has been rearchitected into a fully modular, extensible, and upgradable Staking platform. v0.2 takes learnings from the v0.1 release and builds upon its foundation by focusing on the following goals: 

• Greater flexibility for Community and Node Operator Stakers via a new unbonding mechanism, while retaining a secure non-custodial design for staked LINK.
• Improved security guarantees for oracle services secured by Chainlink Staking via the slashing of node operator stake.
• Modular architecture to iteratively support future improvements and additions to Chainlink Staking, such as expansion to more services.
• Dynamic rewards mechanism that can seamlessly support new external sources of rewards in the future, such as user fees.

With security being of paramount importance in the Chainlink ecosystem, a competitive crowdsourced audit of the Chainlink Staking v0.2 codebase began on August 25, 2023 on the Code4rena platform. The contest featured an aggregate prize pool of $250K and lasted for 18 days. The Code4rena platform was also successfully used to review the codebases of Staking v0.1 and CCIP, and has been used by many leading protocols such as ENS, OpenSea, The Graph, Aave, and more.

The following blog post provides an overview of the launch process of Staking v0.2 and the new upgrades and features being implemented. Refer to the Chainlink Staking FAQ for additional information.

Overview of v0.2 Parameters

The below table provides an overview of parameters in Chainlink Staking v0.2 at launch. More information about each parameter is described within this blog post. 

v0.1 Migration and Phased Rollout

The launch of Chainlink Staking v0.2 will involve multiple entry phases so that a wide diversity of Chainlink community members can contribute to the cryptoeconomic security of the Chainlink Network. By increasing the likelihood that the v0.2 staking pool is distributed across a large number of entities, including smaller participants, the security assurances provided by Chainlink Staking are strengthened. 

Phase 1: Priority Migration

On November 28, 2023 at 12PM ET, v0.1 stakers will have the opportunity to migrate their v0.1 stake and accrued LINK rewards to v0.2 or withdraw. This Priority Migration period will last for nine days, where v0.1 stakers can choose to migrate all or a portion of their v0.1 stake and LINK rewards. If choosing to migrate a portion, then all non-migrated v0.1 stake or rewards will be automatically withdrawn. If a v0.1 staker takes no action, then their staked LINK and rewards will remain in v0.1 and will no longer earn rewards. 

Given that the v0.2 pool is larger than the v0.1 pool, and accounting for accrued rewards, v0.1 stakers have guaranteed access to v0.2 if they participate in the Priority Migration phase. Once the Priority Migration period ends, v0.1 stakers can still migrate or withdraw during Early Access and General Access; however, entry to v0.2 will not be guaranteed due to the capped pool size. 

Note that v0.1 stakers are only eligible to migrate an amount equal to the sum of their staked LINK and any LINK rewards accumulated in v0.1 during the Priority Migration phase. v0.1 stakers who want to stake more LINK, up to the per-address cap, have the opportunity during later entry periods. 

The Priority Migration period for v0.1 stakers was extended to nine days to provide additional time for existing v0.1 stakers to migrate their staked LINK and rewards to v0.2.

Phase 2: Early Access

After the Priority Migration period ends on December 7, 2023 at 12PM ET, LINK token holders who meet at least one predefined criterion on the updated Early Access Eligibility List will have the opportunity to stake LINK in v0.2 up to the per-wallet maximum. Similar to the Early Access period during v0.1 launch, being on the eligibility list provides an opportunity to stake in v0.2 but does not serve as a guarantee of entry given the capped pool size. The Early Access entry period will last for four days. The Early Access Eligibility List builds upon the list previously used in v0.1. More information about the Early Access Eligibility List criteria can be found in this recent blog. 

Similar to Priority Migration, the Early Access period for v0.1 stakers was extended to four days to provide additional time for eligible stakers to participate in Staking v0.2.

Phase 3: General Access

After Early Access ends on December 11, 2023 at 12PM ET, the v0.2 staking pool will open to General Access, at which point anyone will have the chance to stake up to the per-wallet maximum, provided that the v0.2 pool has not yet been filled. 

Modular Framework For Iterative Upgrades

The Chainlink Staking v0.2 codebase has been rearchitected to operate as a modular set of smart contracts. This modularity allows a broad scope of upgrades, including new features and configuration changes, to be applied without requiring a full staker migration to a new set of smart contracts. 

For example, while v0.2 will launch with support for the ETH/USD Data Feed on Ethereum with similar alerting conditions to v0.1, future iterative upgrades to Staking can include the expansion of Chainlink Staking to secure additional oracle services (e.g., CCIP) by adding new alerting conditions modules. As new oracle services are secured by Chainlink Staking, the modular nature of v0.2 and the upgraded reward mechanism make it easier to introduce new sources of rewards such as user fees. 

Additional upgrades currently being worked on for Staking are new tools that enable BUILD projects to make Chainlink BUILD rewards available to stakers. We anticipate continued momentum around great teams joining the BUILD program over the coming months. The rollout of both user fee rewards and BUILD claiming tools within the Staking platform will be based on user fee volumes and BUILD participation continuing to accelerate and reaching high enough levels to meaningfully contribute to additional security for the network. More information around Chainlink BUILD rewards and eligibility for v0.2 stakers and historical v0.1 stakers is planned to be provided in the future. 

In addition to the above, future planned expansions to Chainlink Staking include expanding the node operator reputation system to more holistically incorporate staking and creating more robust security guarantees via expanded slashing and alerting conditions. 

Expanded Pool Size and Accessibility 

Staking v0.2 will feature an expanded total pool size of 45,000,000 LINK to increase the accessibility of Chainlink Staking to a more diverse audience of LINK token holders. The pool size represents an 80% increase from the pool cap of v0.1 and would account for over 8% of the current circulating supply of LINK.

At the launch of Staking v0.2, the capped 45,000,000 LINK pool will consist of a 40,875,000 LINK allotment for community members, with the remainder allocated to Chainlink node operators currently servicing Chainlink Data Feeds. Community Stakers can stake a minimum of 1 LINK and up to a maximum of 15,000 LINK during Early Access and General Access on a per-address basis. Note that entry to v0.2 during these phases is not guaranteed due to the capped pool size. Node Operator Stakers can stake a minimum of 1,000 LINK and a maximum of up to 75,000 LINK.

The expanded pool size of v0.2 reflects the goal of increasing the security guarantees and user assurances provided around in-scope oracle services over time, while maintaining a security-conscious approach to the expansion of Staking. Furthermore, the capped pool size also supports the network’s economic sustainability before new sources of staking rewards, such as user fee rewards, are made available to LINK stakers. Over time, the pool size cap is expected to increase, particularly as Chainlink Staking continues to evolve to secure additional Chainlink services. 

Unbonding Mechanism

A key design principle in the development of Chainlink Staking v0.2 has been to provide LINK stakers greater flexibility and predictability around how they manage their staked LINK. Instead of locking up staked LINK until the next version of staking is released, v0.2 introduces an unbonding mechanism for withdrawing staked LINK.

The unbonding mechanism plays a key role in the security assurances provided with Chainlink Staking, namely by supporting the stability of the staking pool over extended periods of time and ensuring that there will be a sufficient amount of staked LINK available in the system to be slashed if a valid alert is raised (i.e., preventing withdraws before slashing can occur).  

At any point in time, stakers can initiate a withdrawal of their staked LINK from v0.2, which begins a 28-day cooldown period. Once the cooldown period is complete, a seven-day claim window begins where staked LINK can be withdrawn. If the staked LINK is not withdrawn during the claim window, the LINK automatically re-enters v0.2. Therefore, if a staker changes their mind after initiating a withdrawal of their staked LINK, they do not have to take any action. 

Staked LINK continues to accrue rewards during both the cooldown and claim window periods, up until any staked LINK is withdrawn. Note that withdrawing staked LINK via the unbonding mechanism may incur penalties on accrued rewards, depending on how long a staker has participated in v0.2 (further explored below). 

Claimable Rewards and Ramp-Up Period

v0.2 features a new LINK rewards mechanism designed to further incentivize the stability of the v0.2 staking pool, support the security assurance provided by staking, and provide greater flexibility around staking rewards.

Attributed Rewards are earned by stakers during their participation in staking, which are composed of Claimable Rewards and Locked Rewards. Claimable Rewards can be withdrawn by stakers at any time without penalty. Locked Rewards turn into Claimable Rewards over a period of time known as the ramp-up period. The ramp-up period is a 90-day period, tracked individually for each staker, that starts at 0% when a staker first stakes and linearly increases to 100% of the possible reward rate. The percentage of claimable Attributed Rewards is proportional to the amount of time spent in the ramp-up period.

For example, if a staker has progressed through 50% of their ramp-up period, then 50% of their Attributed Rewards become available as Claimable Rewards. After a staker has progressed through 100% of their ramp-up period, all previously earned Attributable Rewards are made available as Claimable Rewards, while any additional Attributable Rewards earned moving forward will automatically take the form of Claimable Rewards.

If a staker completes a withdrawal of any amount of their staked LINK, their ramp-up period will reset to 0% and any Locked Rewards earned will be forfeited back to the rewards pool and become available for all stakers in the same category (i.e., a Community Staker’s Forfeited Rewards can then be earned by all Community Stakers). After a withdrawal of staked LINK, a staker will need to go through the full ramp-up period again in order for Attributed Rewards to fully turn into Claimable Rewards. 

Note that Claimable Rewards can be withdrawn at any point in time by a staker without resetting their ramp-up period progress. For Node Operator Stakers, the ramp-up period only applies to the base rewards on their staked LINK, but not for auto-delegation rewards from Community Stakers. 

The table below provides an overview of the different types of rewards that exist within Chainlink Staking v0.2. 

Similar to Staking v0.1, a portion of the Attributed Rewards earned by Community Stakers will be made available to Node Operators Stakers as Delegation Rewards in exchange for providing a service on behalf of Community Stakers (i.e. performing oracle computation). The delegation rate in v0.2 will be set at 4%. The design is similar to existing stake-based delegation designs as the rewards derived from community stake are used to further increase network security. 

Community Stakers in v0.2 will see their stake automatically delegated to Node Operator Stakers without node operators taking control of community stake. Delegation rewards in v0.2 will be made available to Node Operator Stakers proportionally to the amount they have staked. 

Dynamic Reward Rates

The reward rate calculation for v0.2 has been rearchitected to incentivize a fully-filled Staking pool and improve support for new sources of staking rewards in the future (e.g., user fees). While v0.1 has a fixed reward rate (i.e., a single rate for all Community Stakers regardless of pool fill rate), v0.2 introduces a variable reward rate. 

The variable reward rate results from the fact that a fixed amount of rewards in total are made available to the staking pool per unit of time, regardless of how much aggregate LINK is staked in the pool. Therefore, stakers won’t have a fixed reward rate, but rather the rate of reward will be variable based on how full the pool is and the amount of rewards made available per unit of time (creating an effective floor rate at a specific pool size limit and fixed reward amount). If the pool isn’t full, the same amount of rewards will be made available proportionately to a reduced number of stakers, resulting in a higher reward rate, and vice versa.

This change in reward rate calculation was required given that the source of rewards in Chainlink Staking in the future is expected to increasingly shift towards being derived from external sources of rewards (e.g., user fees), which may be a variable amount.

Assuming an entirely filled community pool, the community stake portion of the v0.2 pool at launch will feature a base floor reward rate of 4.5% per year in LINK for helping secure the Chainlink Network. From those annualized rewards, 4% of Community Staker rewards will be automatically directed to Node Operator Stakers as a Delegation Reward. The result is an effective base floor reward rate of 4.32% on an annualized basis for Community Stakers in v0.2 at launch. As noted previously, the actual amount of rewards made available to stakers will depend on how full the pool is, with a higher effective reward rate if the pool is less than full.

This base floor reward rate was determined based on the need to balance the network’s economic sustainability over time, while ensuring stakers are fairly rewarded for their work securing the network. It is expected that emissions-based rewards will trend eventually toward zero as external sources of staking rewards, such as user fees, grow to sustainably support the network’s cryptoeconomic security staking layer.

The node operator stake portion of the v0.2 pool will feature the same 4.5% base floor reward rate but will be supplemented by Delegation Rewards from Community Stakers and made available to Node Operator Stakers proportionally based on the amount each operator stakes.

Staked LINK Slashing For Node Operator Stakers

Chainlink Staking v0.2 offers increased cryptoeconomic security by supporting the ability to slash a portion of staked LINK by Node Operator Stakers who help power oracle services secured by Staking. When a valid alert is raised and a slashing condition is met, these Node Operator Stakers will see a portion of their staked LINK slashed as a penalty for failing to meet performance requirements. At launch, Node Operator Stakers serving the ETH/USD Data Feed on Ethereum will be slashed 700 LINK each if a valid alerting condition is met. For raising a valid alert, the alerter will be rewarded 7,000 LINK.

Over time, the conditions around alerting and slashing amounts are expected to evolve, particularly as Chainlink Staking expands to support more oracle services. In v0.2, Community Stakers will not be at risk of slashing, with such a change requiring a migration to a new Staking version. Additionally, Node Operator Stakers only serving oracle services not secured by staking will also not be at risk of slashing. 

Timelocked Upgradability

For any iterative upgrade to the modular Chainlink Staking v0.2 codebase that materially impacts stakers, such as the modification of slashing conditions, upgrades will be announced proactively such that stakers can choose to initiate and complete a withdrawal of their staked LINK before the upgrade is completed on-chain. 

As an additional security measure, all on-chain security-critical configuration changes and upgrades to Chainlink Staking v0.2 must pass through a timelock smart contract featuring a time delay of up to a few weeks, with critical configuration changes taking the longest (longer than the unbonding period). This timelock mechanism allows the community to review and choose to opt-out of such changes before they are implemented on-chain. Only emergency functions that are designed to protect stakers and certain ministerial functions, such as adding rewards, can be called without a time delay. However, no configuration changes or upgrades can be deployed without going through the timelock. 

Note that the Chainlink Staking smart contracts in v0.2 will remain non-custodial, meaning stakers always have complete control over their staked LINK, which cannot be withdrawn by any other entity. Any future migration from v0.2 to a new Staking version will continue to involve a manual migration from stakers, similar to v0.1.

The Evolution of Chainlink Staking

The research and development of the v0.2 Staking platform beta was based on the learnings from v0.1, as well as feedback from the community and service providers like node operators. We want to thank all of the Stakers who participated as pioneers in Staking v0.1. The community plays a large role in the Chainlink’s Network success and those who are the most active in supporting the security of the ecosystem are supported via mechanisms such as Early Access and more.

The long-term goal for the Chainlink ecosystem remains building Chainlink into a global standard by providing the most expansive collection of secure oracle services across external data, off-chain compute, and cross-chain interoperability. By accelerating the adoption of the Web3 ecosystem, Chainlink oracle services can operate in an increasingly economically sustainable manner, with service providers rewarded based on their work in the oracle economy. Ultimately, Chainlink Staking will continue to evolve over time alongside the Web3 ecosystem, helping drive forward the creation of a robust Internet of Contracts.  

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Disclaimer: This post is for informational purposes only and contains statements about the future, including anticipated product features, development, and timelines for the rollout of these features. These statements are only predictions and reflect current beliefs and expectations with respect to future events; they are based on assumptions and are subject to risk, uncertainties, and changes at any time. Eligibility for Early Access does not guarantee your participation in the Chainlink Staking program. Staking eligibility and participation requirements are subject to modification at any time without notice. There can be no assurance that actual results will not differ materially from those expressed in these statements, although we believe them to be based on reasonable assumptions. All statements are valid only as of the date first posted. These statements may not reflect future developments due to user feedback or later events and we may not update this post in response.

Note: This blog was updated to include the launch dates for Chainlink Staking v0.2, featuring an extension to the Priority Migration and Early Access periods. The blog was also updated to include additional parameter details for Staking v0.2.