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How Super-Linear Staking Offers Greater Cryptoeconomic Security

Last week, Chainlink 2.0 authors Sergey Nazarov, Ari Juels, Andrew Miller and Lorenz Breidenback participated in a research panel discussion about the most innovative and exciting technologies outlined in the 136-page whitepaper. Topics included the history and future of hybrid smart contracts fueling the rapid growth of decentralized finance (DeFi), the role of Fair Sequencing Services FSS and the power of super-linear staking to provide exponentially greater cryptoeconomic security. 

Oracle nodes deposit funds to participate in a network where they have economic incentive to perform honestly and reliably as unreliable oracles lose users and revenue. This staking model dissuades oracles from accepting bribes to perform incorrect computations or corrupt reports. “What we’re looking to do with staking is bolster these kinds of existing implicit incentives,” Ari Juels explained.

As the Chainlink network grows and secures more value, it requires greater protection, which, in turn, attracts more users and value in a virtuous cycle of increasing cryptoeconomic security. Super-linear staking achieves a quadratic staking impact by requiring an attacker to have resources that are quadratically greater than the combined security deposits of all the nodes in a decentralized oracle network (DON) to succeed. 

“It means that an oracle network can achieve more economic security than there are deposited funds,” Juels said. “You get real bang for your buck.”

This model achieves a strong economy of scale because the cost of economic security drops as more nodes are added to a network. Super-linear staking stretches a small amount of capital in the form of a security deposit because nodes must report correctly or incorrectly (honestly or dishonestly) in sequence. An attacker would have to successfully bribe all nodes more than the aggregate reward incentivizing individual nodes to be honest – and it only takes one honest node to thwart an entire attack.  

“This creates this really difficult property for an adversary to convince everybody to be dishonest, because even one person being honest would make the whole scheme immediately collapse in short order with an immediate consequence for all the dishonest actors,” Nazarov explained. 

“Each one of them (nodes) is exposed to the full amount of the incentives so it would be a much larger capital cost for a successful briber,” Miller added. 

“We’re not relying on the fact that one out of all of these nodes is just honest because they’re a good person; in fact, they have a strong economic incentive to be the honest one,” Breidenback agreed. He continued to highlight super-linear staking’s ability to protect against a wide range of real-world attacks, including prospective bribery where attackers condition bribe payout on whether or not an attack was successful.

Breidenback rounded out the super-linear staking portion of the panel by emphasizing the significance of the model’s two-tier mechanism designed to “amplify the security of a first-tier mechanism to the security of a very secure second-tier mechanism without having to pay the cost of the second-tier mechanism on every report.” The “mere existence” of a second-tier that can adjudicate alerts raised by the first tier presents a substantial threat that “looms over” a network where honest parties are rewarded and dishonest ones are punished. 

For more information on Chainlink 2.0, read the announcement blog and whitepaper and visit the Whitepaper Research Summary on the Smart Contract Research Forum.

Watch the full research panel discussion below.

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