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Staking Is Coming To The Chainlink Network In 2022

In a recent presentation about the future of the Chainlink network, Chainlink Co-founder Sergey Nazarov detailed several key initiatives for the coming year, including Chainlink’s Cross-Chain Interoperability Protocol (CCIP) and the much-anticipated release of staking within the Chainlink network. 

A unique and special milestone

Nazarov explained the “unique and special milestone” behind the pending release of staking: the complete profitability of multiple Chainlink oracle networks, thanks to the growing fees paid by decentralized applications, whose users are multiplying due to efficiencies gained through their native blockchains and Chainlink Off-Chain Reporting.

“They don’t require a block reward or an oracle reward of any kind to operate, and this milestone has led us to plan for staking’s release in this coming year,” Nazarov said. 

Moving up the security-impact curve

Nazarov explained that these profitable networks of highly reliable node operators have become so efficient through infrastructure and security best practices that they have reached a point of diminishing returns, necessitating the next move up the security-impact curve.

“At the end of the day, this is a great achievement,” Nazarov said. As the current and future fee opportunity for top-tier node operators grows, staking will allow the most successful node operators and committees to receive a greater portion of network rewards, helping to reinforce the greatest degree of network security. 

Outlined in the Chainlink 2.0 whitepaper, the Chainlink staking model rewards nodes based on two critical differentiators: reputation and deposit. Nodes with the best reputation based on their history of accurate, low-latency performance will be paid for by the highest number of users, allowing those nodes to make larger deposits and gain greater stake in the security of the Chainlink network.

Solving a complex problem

This model works similarly to proof-of-stake (PoS) blockchains. However, Nazarov said applying staking to oracle networks is its own complex problem. “Just like oracle networks generate a unique form of decentralized computation different from blockchains, the staking that is applied to that unique form of decentralized computation also needs to be unique.”

Nazarov emphasized the time spent “feverishly working” to help ensure Chainlink’s staking model delivers the maximum degree of security, which will come to fruition when an early version is released in 2022.

“Now that we’re seeing a certain level of profitability in these networks, we think it’s a good time to do this.”

Watch Sergey Nazarov’s presentation on Chainlink staking.

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