Chainlink, one of the largest blockchain oracle networks, has introduced a way to stake its native token.
Set to go live at 12 PM ET, the new service will allow users to earn yield of up to ten percent by depositing their LINK tokens.
The idea is to encourage stakers to carry out certain functions that are integral to the Chainlink network, such as running nodes and “participating in a decentralized alerting system that flags if the Data Feed has not met certain performance requirements regarding uptime,” the company announced in a blog post Tuesday.
Users that were eligible for early access will be able to stake as many as 7,000 LINK tokens in the staking pool before it is opened to the general public on Dec. 8. The cap for the staking pool has been set to an initial limit of 25 million LINK tokens and entry is on a first come first serve basis.
Chainlink boomed during the 2020-2021 bull-run as an increasing number of people relied on the company’s innovative data feeds to provide relevant data to smart contracts, the self-executing pieces of code that automate transactions on the Ethereum blockchain.
The company was relatively late in rolling out a staking product, and until recently, Chainlink users had to launch their own nodes in order to receive token rewards. Now they will be able to stake directly through Chainlink’s interface—and some will earn decent rewards. “Community” stakers, for instance, will earn a baseline rate of 5 percent per year against their staked coins while node operator stakers will earn not only 5 percent per year from their own stake but an additional 5 percent from the community stakers’ rewards.
“Staked LINK from node operators serves as a direct quantifiable commitment to their performance, while community stake adds an additional layer of incentivization to the honest and reliable performance of node operators,” explained Chainlink in a blog post.
Under the staking system’s existing security parameters, both node operators and community stakers will have their staked tokens and rewards locked up in a smart contract until v0.2 of Chainlink Staking is launched in around 9-12 months.
At press time, LINK was trading at $7.09, down 2.7% over the last 24 hours. The token is the 20th largest cryptocurrency with a market cap of $3.6 billion.