Staking for decentralized oracle network Chainlink is now live on Ethereum, in what Chainlink co-founder Sergey Nazarov claims is one of the most highly anticipated events for its network.
Until now, token holders had been limited in how they could put their LINK to work and receive rewards for securing the network. With staking enabled, holders of LINK can contribute to the network's security and receive rewards.
Chainlink is the most widely used oracle network in the industry, according to Dune Analytics. Oracle networks are critical blockchain infrastructure allowing developers to securely use real-world data in their applications and enabling the majority of on-chain use cases today.
Chainlink will initially launch a beta release, accessible solely for staking to secure the Ethereum ETH/USD price feed. The pool is capped at 25 million LINK tokens, which is about 2.5% of the total LINK supply with a value of $177.5 million, at the time of writing. Chainlink plans to allow staking for other services in the future and is using this beta to test and improve future launches.
Staking is initially open to node operators — contributors who operate the hardware and software that powers the network — and members of the community who qualified for early access. Users can stake up to 7,000 LINK tokens and start receiving rewards, and are subject to a 9-12 month lock up period. This is because the next version of staking is expected to launch in that timeframe, at which point stakers can either unlock their tokens or migrate them to the new version.
Staking will be open to the general public on Dec. 8.
How staking fits into Chainlink’s long term plan
Staking is the first step in what Nazarov said is a “new chapter in Chainlink’s life” and its Economics 2.0 plan, which aims to increase the network’s security and revenue.
“It's a feature that while useful on its own, is actually part of this larger Economics 2.0 plan. I think that's the thing that people don't fully get,” Nazarov told The Block. Economics 2.0, a plan with several initiatives including staking, aims to solidify Chainlink's market dominance in the oracle sector and make it a "global standard."
Having a large user base and a strong network effect are required to kickstart a sustainable economic model, according to Nazarov. He said Chainlink has hit the minimum threshold of users and activity needed to start its economics. This was one of the main reasons staking and other parts of the Economics 2.0 plan have not launched until now.
Staking, along with other initiatives such as its BUILD and SCALE programs, all have the goal of increasing the network's economic sustainability. “This will help scale the network's security and its usage as more on-chain use cases are created,” Nazarov said.
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