Learn about the release process and function updates of Chainlink Staking v0.2 in this article

Staking is a core element of Chainlink 2.0 economics, and the goal is to build a new cryptoeconomic security layer for the Chainlink network. Ecological participants, including node operators and community members, can pledge their interests to ensure the service level of the oracle machine and receive corresponding rewards.

In December last year, Chainlink released the first version of the Staking plan (v0.1), and launched a pledge pool with an upper limit of 25 million LINK tokens to ensure the cryptoeconomic security of the ETH/USD Data Feed on Ethereum. In the v0.1 version, both community stakers and node operator stakers can participate in the decentralized alarm system and monitor the service level of oracle nodes to obtain pledge rewards.

The next version of Chainlink Staking (v0.2) is planned to be released in the fourth quarter of this year, and the pledge pool will initially expand to 45 million LINK. The V0.2 beta upgrade will take a phased approach to broaden participation. The first is the "Priority Migration" phase for existing v0.1 stakers; the "Early Access" phase and the "General Access" phase will follow.

v0.1 is the first version of the equity pledge plan, while v0.2 has been refactored and upgraded to a fully modular, scalable and upgradeable staking platform. v0.2 focuses on the following goals based on v0.1:

• Higher Flexibility: Community stakers and node operator stakers gain greater flexibility, and staked LINK tokens remain in the same secure non-custodial model.
• **Greater security: **Chainlink Staking provides greater security for oracle services.
• Modular architecture: Compatible with future upgrades and changes, such as extending staking to more oracle services.
• Dynamic reward mechanism: Perfectly supports new reward sources in the future, such as user fees.

Security is the most important aspect of the Chainlink ecosystem, so the code base of Chainlink Staking v0.2 officially launched a public code audit competition on the Code4Rena platform today. The competition will run for 18 days and has a prize pool worth $250,000. Both Staking v0.1 and CCIP code bases are audited on the Code4Rena platform. In addition, many top projects such as ENS, OpenSea, The Graph, and Aave use Code4Rena to audit code.

This article will generally review the release process of Staking v0.2, as well as its new upgrades and functions. More detailed parameters about v0.2 will be announced on the eve of the mainnet launch.

Staking is a core element of Chainlink 2.0 economics

v0.1 Stakeholder Migration and Phased Rollout

Chainlink Staking v0.2 will be launched in multiple stages, with the aim of involving the majority of Chainlink community members and contributing to the cryptoeconomic security of the Chainlink network. The coverage of the v0.2 staking pool will be wider and reach more small-scale community participants, so the security of Chainlink Staking can be better enhanced.

Phase 1: Priority Migration

Pledgers of v0.1 can preferentially migrate the LINK tokens pledged in v0.1 and accumulated LINK rewards to v0.2 or take them out. The priority migration phase will last for 7 days. During this period, v0.1 stakers can migrate all or part of their v0.1 LINK pledged tokens and accumulated LINK rewards. If a staker chooses to migrate a portion of LINK, all pledges or rewards that were not migrated in v0.1 will be withdrawn. If v0.1 stakers do nothing, their LINK stakes and rewards will remain in v0.1 and rewards will stop accumulating.

Since the size of the v0.2 pledge pool is larger than that of v0.1, and the accumulated LINK rewards are also included in the calculation, v0.1 pledgers can definitely participate in the priority migration phase of v0.2. After the priority migration phase is over, v0.1 pledgers can still migrate and withdraw in the subsequent early participation and public participation phases. However, there is no guarantee that they will be able to participate in these two phases because there is an upper limit on the size of the pledge pool.

It is worth noting that during the priority migration phase, v0.1 pledgers cannot transfer out more LINK than the sum of their pledged and rewarded LINK. If v0.1 stakers want to stake more LINK within the upper limit of each address, they can try it in the next two stages.

Phase 2: Early Access

After the priority migration phase is over, LINK token holders who meet at least one early participation qualification will have the opportunity to stake LINK tokens in v0.2 until the upper limit of each wallet address is reached. Like the early participation stage of v0.1, qualifying only means you have the opportunity to stake in the v0.2 staking pool, but there is no guarantee that you will be able to stake because there is an upper limit on the size of the staking pool. The Early Access phase will last for two days. The qualifications for early participation will be set based on the v0.1 version. Like v0.1, we will also launch an "Early Access Eligibility App" before release so that everyone can check whether they are eligible.

Phase 3: General Access

After the early participation phase ends, the v0.2 staking pool will be open to the public. By then, if the v0.2 staking pool has not reached the upper limit, anyone will have the opportunity to participate in staking until the single wallet limit is reached.

Chainlink Staking v0.2 will be launched in phases

Using a modular framework for iterative upgrades

The Chainlink Staking v0.2 code base has been restructured and upgraded into a modular set of smart contracts. After modularization, we can perform a series of upgrades, such as adding new functions or changing configurations. All stakers do not need to migrate to the new smart contract to achieve the upgrade.

For example, v0.2 will support the ETH/USD price feed on Ethereum, and the alarm conditions are similar to v0.1; and Chainlink Staking's future iterative upgrades can add other new alarm condition modules to expand to other oracle services (such as :CCIP). As Chainlink Staking provides security for more oracle services in the future, v0.2's modular design and reward mechanism upgrades will allow us to more easily introduce new reward sources (eg: user fees).

The upgrade currently being developed by Chainlink Staking also includes new tools for the BUILD project to distribute Chainlink BUILD rewards to stakers. We look forward to more outstanding projects joining the BUILD program in the coming months. The Staking platform will launch user fee rewards and a BUILD reward collection plan. Rewards will be issued based on user fees and BUILD program participation, and ecological members will be continuously promoted to provide higher security for the Chainlink network. Details about Chainlink BUILD rewards, v0.2 staker qualifications, and v0.1 stakers will be released in the future.

In addition, Chainlink Staking will expand the reputation system of node operators in the future, more fully incorporate the pledge mechanism, and build a more comprehensive fine and alarm mechanism to establish a more robust security guarantee.

Expanding staking pool size and accessibility

The upper limit of the pledge pool of Staking v0.2 will be increased to 45 million LINK to cover more types of LINK token holders. The upper limit of the pledge pool has increased by 80% compared to v0.1, and accounts for 8% of the current LINK circulation.

The scale of the v0.2 pledge pool is expanded to enhance the security of oracle service and enhance user confidence. In addition, we keep an eye on security while scaling up staking. Increasing the staking pool cap can also provide support for the sustainable economic development of the Chainlink network until new sources of staking rewards (such as user fees) are implemented. The size of the staking pool is expected to continue to expand over time, especially as Chainlink Staking will cover more and more Chainlink services in the future.

Release the pledge mechanism

A key design principle of Chainlink Staking v0.2 is to provide LINK stakers with greater flexibility and predictability in managing LINK tokens. Therefore, v0.2 introduced the unstaking mechanism.

The unstaking mechanism plays a key role in the security of Chainlink Staking. This mechanism can maintain the stability of the pledge pool for a long time. When an effective alarm is issued, it can be guaranteed that there are enough LINK tokens in the system that can be deducted (that is, to avoid withdrawing LINK pledged tokens before being punished).

Stakers can withdraw their staked LINK tokens from v0.2 at any time, and a "cooldown period" of several weeks will begin immediately. Once the cooldown period ends, a window of several days opens. During this period, stakers can withdraw their staked LINK tokens. If the LINK token is not withdrawn within this window period, it will automatically re-enter v0.2. Therefore, if a staker changes their mind after initiating the withdrawal process, there is no need to take any further action.

The pledged LINK token will continue to accumulate rewards during the cooling-off period and subsequent window periods until it is finally withdrawn. It is worth noting that withdrawing LINK tokens through the unstaking mechanism may result in the deduction of accumulated rewards, depending on how long the staker has participated in v0.2 (Note: will be explained in detail below).

Can receive rewards and Ramp-up stage

A new LINK reward mechanism will be launched in v0.2, aiming to further enhance the stability of the v0.2 staking pool, improve the security of staking, and increase the flexibility of staking rewards.

Stakeholders will receive attributed rewards (Attributed Rewards) during the staking process. Attributed rewards include "Claimable Rewards" and "Locked Rewards". Claimable rewards can be claimed at any time without penalty. Locked rewards will gradually become collectible rewards during the ramp-up phase. The ramp-up phase lasts several weeks and is tracked individually for each staker. In the initial stage of staking, the proportion of bonuses that can be claimed is 0%, and then it will increase linearly to 100% over time. The proportion of rewards that can be claimed will be proportional to the progress of the ramp-up phase.

For example, if the staker's ramp-up phase progresses 50%, then 50% of the attributed rewards (Attributed Rewards) will be converted into claimable rewards (Claimable Rewards). When the staker's ramp-up phase reaches 100%, all vested rewards will be converted into claimable rewards. And all the newly added attribution rewards will be automatically converted into rewards that can be claimed.

If the pledger successfully withdraws any number of LINK pledged tokens, his ramp-up process will be reset to 0%, and all locked rewards that have been obtained will be automatically invalidated and flow into the public bonus pool to be distributed to all pledges of the same kind By. For example, the invalidation reward of a certain community staker can be distributed to all community stakers. After the pledger takes out the pledged LINK token, the ramp-up stage will be reset, and the vested rewards will be converted into rewards that can be claimed after the end.

What should be noted here is that stakers can withdraw at any time to receive rewards, and the ramp-up phase will not be reset after withdrawal. For node operators staking, the ramp-up phase only applies to the base rewards generated by their staked LINK tokens, and does not apply to automatic delegation rewards from community stakers.

The different reward types in Chainlink Staking v0.2 can be seen in the table below.

| | | | --- | --- | | Reward type | Definition | | Vesting Rewards | All LINK rewards issued to stakers, including collectible rewards and locked rewards. All locked rewards can be claimed after the ramp-up phase ends. | | Rewards available | LINK rewards that can be withdrawn at any time. The proportion of collectible rewards to vested rewards is directly proportional to the time progression of the ramp-up phase. | | Lock rewards | LINK rewards that are temporarily unavailable. The ratio of locked rewards to vested rewards is inversely proportional to the time course of the ramp-up phase. | | Void Rewards | If a staker withdraws the staked LINK token before the end of the ramp-up phase, all locked rewards will be void and returned to the bonus pool. |

As with Staking v0.1, part of the vesting rewards of community stakers will be distributed to node operator stakers in the form of Delegation Rewards. In return, node operators provide services (i.e. perform oracle operations) on behalf of community stakers. This mechanism is similar to the current staking agent mechanism. The staking rewards generated by community staking will be used to further improve the security of the network.

In version v0.1, the tokens pledged by the community stakers will be automatically entrusted to the node operator stakers, and the node operators will not control the tokens pledged by the community. In v0.2, the amount of delegated staking rewards received by node operator stakers is proportional to the amount of LINK they stake.

Dynamic reward rate

We have re-adjusted the way the reward rate is calculated in v0.2 to incentivize staking behavior and better support new sources of staking rewards in the future (e.g. user fees). The reward rate for v0.1 is fixed, that is: no matter what the staking rate is in the staking pool, the reward rate for all community stakers is fixed, while v0.2 will be adjusted to a dynamic reward rate.

The dynamic reward rate is based on the fact that the total amount of rewards given to all stakers is fixed, and the rewards are distributed to all stakers in proportion to unit time, and are not affected by the total number of LINK in the stake pool. Therefore, the reward rate for stakers is not a fixed value, but changes dynamically based on the pledge rate of the pledge pool and the amount of rewards generated per unit time. When the upper limit of the pledge pool size and the total fixed reward amount are at a certain level, an effective guaranteed reward rate can be formed. If the staking pool is not filled, the same amount of rewards will be distributed proportionally to a smaller number of stakers, so the reward rate will naturally increase, and vice versa.

Since the source of rewards for Chainlink Staking will gradually shift towards user fees in the future, and user fees change dynamically, the calculation method of the reward rate needs to be changed.

Deduct LINK tokens pledged by node operator pledgers

Chainlink Staking v0.2 allows deducting a portion of LINK tokens pledged by node operator pledgers as a penalty. These node operators guarantee the service quality of oracle machines through pledge. The deduction of LINK tokens can further enhance the cryptoeconomic security of the Chainlink network. When a valid alarm is issued and the penalty condition is triggered, a part of the LINK token pledged by the node operator will be deducted to punish them for failing to meet the standard.

In the future, as Chainlink Staking continues to expand to more oracle services, the conditions for alarms and penalties will further evolve. In v0.2, community stakers will not have their pledged LINK tokens deducted, but these stakers need to upgrade to the new Staking version first. In addition, if the stakers of the node operator provide oracle services outside the scope of staking, they will not face the risk of deducting LINK tokens.

Use time lock smart contract to upgrade

If the modular Chainlink Staking v0.2 codebase requires any iterative upgrades that will have a significant impact on stakers, such as modifying the slashing mechanism, these upgrades will be announced in advance so that stakers can choose whether to complete the upgrade on the chain. Withdraw the pledged LINK token.

Another safety measure is that all on-chain configuration changes and upgrades that are critical to security must use a time-lock smart contract, which will set a time delay of up to several weeks, the most critical configuration changes The longest delay is required (note: longer than the time to unstake). This timelock mechanism allows the community to fully evaluate updates and decide for themselves whether to opt out before they are implemented on-chain. Only emergency functions to protect stakers or some advanced functions (such as: adding rewards) do not require delays. However, all configuration changes and upgrades must be timelocked before they can be deployed.

It should be noted here that Chainlink Staking v0.2’s smart contracts will still adopt a non-custodial mode. In other words, the pledger always has full control over the pledged LINK token, and no third party can withdraw it. When v0.2 is upgraded to the new version of Staking in the future, stakers still need to manually migrate.

The Evolution of Chainlink Staking

The research and development of the V0.2 beta Staking platform is based on v0.1. Additionally, we have listened to feedback from the community and service providers such as node operators. We would like to thank all stakers who participated in staking v0.1. Community is critical to the success of the Chainlink network, and we support the most active members of the ecosystem through various mechanisms, including early participation.