We’re almost four weeks out from the rollout of Chainlink Staking v0.2. To recap, the Staking v0.2 announcement released by Chainlink Labs entailed the following:
-Chainlink Staking v0.2 is on track for General Access Opening on December 11, 2023
-v0.2 expands the pool size from 25M LINK to 45M LINK
-Existing v0.1 stakers will have priority migration
-“v0.2 has been rearchitectured into a fully modular, extensionable, and upgradable Staking platform,” taking learnings from v0.1
-v0.2 introduces staked LINK withdrawals through unbonding
-The rollout of a dynamic variable reward rate
These changes not only introduce new opportunities for stake.link – they mark the critical role the protocol will play in this evolution of Chainlink Staking. This was discussed in-depth by one of the founding members of the protocol, LinkPool’s Jonny Huxtable in his end of August Chainlink Staking v0.2 Expansion article.
The most notable feature that was discussed in this blog: The Priority Pool.
We believe that this feature is a gamechanger that breaks down barriers, costs, and efforts to all users to provide the most seamless, stress-free Chainlink staking experience to date.
What is it? How Does it Work?
Originally referred to as the staking queue, and can even be thought of as a sort of “layover, pending takeoff" for LINK tokens, “Priority Pool” was decided on to best reflect how it will operate.
Time and time again we’ve seen before Chainlink Staking v0.1, and more broadly across the DeFi ecosystem in the years prior that people are busy and have lives outside of this space (shocking to believe, isn’t it?).
From vacations to life events to work, we constantly saw how people weren’t able to stake for a multitude of reasons. It’s because of this feedback that we decided to opt out of a first-in-first-out staking mechanism. No LINK will be discriminated against based on the timing of its stake.*
The Priority Pool is made possible because for the first time, stake.link users will receive a blended reward rate between the Node Operator Staking Pool and the Community Staking Pool. This enables us to expand our scope to attract LINK from all corners of the Ecosystem, and enable everyone an access point to staking.
Because the protocol can now direct collateral into the Community Pool, how the Priority Pool works is simple:
Deposit an unlimited amount of LINK tokens into the Priority Pool
Space opens up from Community Pool withdrawals
The Priority Pool automatically stakes into the open space
That’s it.
There’s no sitting around a computer screen waiting for space. No leaving the Staking app open on your mobile device. No wasting any time.
“Priority” in Priority Pool
As discussed earlier, FIFO is done away with to deliver a better staking experience. The timing of when a user deposits their LINK into the Priority Pool will not be a factor on when their LINK is staked.
What will be a factor, however, is whether or not a user holds reSDL in the wallet that deposited their LINK.
Reward Escrow SDL
SDL is the primary token of the stake.link protocol used for governance purposes. Originally when staked, the protocol would mint the receipt token “stSDL” similarly to how staking LINK mints and allots the receipt token “stLINK.”
This changes with the implementation of SLURP-8 | stake.link Tokenomics 2.0 doing away with stSDL.
Instead, stake.link took inspiration from Velodrome Finance where locked SDL positions will soon be represented as a transferable NFT. This NFT will be referred to as “Reward Escrow SDL,” or simply, reSDL.
Coming Full Circle
→ Back to the Priority Pool.
The timing of a deposit won’t be a factor as to when a depositor in the Priority Pool will have their LINK auto-staked into the Community Pool. Whether or not they hold reSDL in their wallet, however, is a factor.
The Priority Pool will consist of two users:
reSDL holders
non-reSDL holders
Those that hold reSDL from the wallet they deposited into the Priority Pool will see their LINK staked in the Community Pool first, then to be followed by the LINK from non-reSDL holders.
We’ve received good, productive questions as to how this works between Twitter and Telegram since the rollout of the Chainlink Staking Expansion v0.2 written by Jonny.
Community Questions:
Q: How exactly are LINK tokens deposited into the Community Pool from the Priority Pool?
A: Let’s dive into a few scenarios below.
Scenario 1:
-10 LINK of space has opened.
-Staker 1 and Staker 2 have the same amount reSDL, each with 10 LINK deposited into the Priority Pool at different times.
Result upon Community Pool space opening: Both users have 5 LINK staked
→ This will be the same outcome for non-reSDL holders *so long as* the LINK deposited by reSDL holders to the Priority Pool has been exhausted.
Scenario 2:
-15 LINK of space has opened
-Staker 1 is an reSDL holder with 10 LINK deposited in the Priority Pool
-Staker 2 is not an reSDL holder with 10 LINK deposited in the Priority Pool
Result: Staker 1 has 10 LINK staked. Staker 2 has 5 LINK staked.
As you can see in both scenarios, reSDL holders are prioritized over non-reSDL holders. We can also see that when comparing reSDL holders with different amounts of staked SDL represented in their NFTs, both are still able to have varying amounts of LINK staked simultaneously, with the only caveat being that the amount of stake is weighted based on the concentration of staked SDL represented in the reSDL NFT.
As a stSDL and Soon to be reSDL Holder, What’s in it For Me? Why Can’t I Rent Out Unused Space as an reSDL Holder?
We appreciate a community member’s specific response to this and would like to shout out @SmartCon_Drums on Twitter’s response to this question.
This mechanism essentially is renting out unused space with fewer steps and no additional transactional costs.
Best put: “The more LINK in the Priority Pool that gets converted to stLINK (regardless if it came from a reSDL holder or not), the more LINK rewards are earned by SDL stakers and stLINK stakers.”
This scenario hits at the core of what the protocol and the member-nodes are out to accomplish: make this Staking experience as stress-free and seamless as possible – creating a Positive Feedback Loop.
In Conclusion
It’s worth repeating: the role that stake.link will play in this next iteration of Chainlink Staking is significant.
The protocol is breaking down barriers, eliminating the stresses of Staking, and maximizing rewards for participants.
What’s most exciting is we are still in the early days of helping secure the Chainlink Network. This is only v0.2. Staking only encompasses securing the ETH/USD data feed.
As time progresses, the 15 member-nodes are best positioned to continue expanding and servicing more price feeds, PoR feeds, VRF requests, CCIP transactions, and more Chainlink Web3 services that are yet to be brought to market.
This will ultimately require more LINK as well as a vigilant community, on the lookout to make alerts for any anomalies and provide optimal security for a network positioned to bring and secure onchain 100s of trillions of dollars.
Stake.link is composed of the finest, most veteran, and most accomplished group of node operators and validators not just in the Chainlink Ecosystem, but across all of Web3. We’re excited for the coming iteration of Staking, and encourage any questions or feedback anyone might have so that we can continue to deliver.