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The latest token to get a bump in its price after announcing the upcoming implementation of staking is Chainlink (LINK), the decentralized oracle network that provides important off-chain information needed for the proper functioning of smart contracts.
Data from Cointelegraph Markets Pro and TradingView shows that since bouncing off a low of $6.67 on June 4, the price of LINK has increased 35% to hit a daily high of $9.00 on June 7.
Here’s a look at what the new developments in the Chainlink ecosystem that could be backing today’s price rally.
Staking LINK has been years in the making
The ability to stake LINK has been a sought-after capability for several years now because Chainlink has consistently been the largest oracle project in the entire cryptocurrency ecosystem.
Staking marks the start of #Chainlink Economics 2.0, a new era for the long-term security and sustainability of oracle networks.
In this update, we define the long-term goals, roadmap, and initial implementation of staking in the Chainlink Network.https://t.co/WJkoUzPA0i
— Chainlink (@chainlink) June 7, 2022
According to the announcement released by Chainlink, the overarching goal of staking on the network “is to give ecosystem participants, including node operators and community members, the ability to increase the security guarantees and user assurances of oracle services by backing them with staked LINK tokens.”
By staking LINK, the ability for nodes to receive jobs and earn fees on the Chainlink network will be enhanced while the ecosystem as a whole will benefit from an “increase in cryptoeconomic security and user assurances.”
Staking not only introduces an incentive to provide reliable data, but it allows for a penalty mechanism for underperforming nodes who fail to achieve the goal of consistently generating accurate oracle reports and delivering them to specific destinations in a timely manner.
Greater community participation
Another benefit of introducing staking is that it will help encourage a larger amount of the Chainlink community to get directly involved with the network by staking LINK to support the performance of oracle networks.
Getting more individuals involved with community monitoring directly helps to increase the decentralization of the Chainlink network and enables “a robust reputation system and slashing mechanism.”
The addition of staking is also expected to increase network adoption over time as new sources of rewards and an increase in the amount of protocol fees that are generated from non-emission-based sources further attracts more participants.
Related: Chainlink launches price feeds on Solana to provide data to DeFi developers
Proof of reserves
The new roadmap also introduces Chainlink Proof of Reserves (PoR).
#Chainlink Proof of Reserve (PoR) enables #DeFi projects to verify off-chain and cross-chain asset reserves through automated audits based on cryptographic truth.
Learn how PoR helps secure cross-chain assets, stablecoins, wrapped tokens, and more https://t.co/qZRj7oExsz
— Chainlink (@chainlink) June 6, 2022
With PoR, the cryptocurrency holdings of a company can be easily audited through an automated process that leverages the transparency of blockchains, smart contracts and oracles.
This real-time auditing of collateral helps to ensure that user funds are protected from “unforeseen fractional reserve practices and other fraudulent activity from off-chain custodians.” In doing so, PoR helps to bring a higher degree of transparency to the crypto ecosystem as a whole and it addresses some of the biggest complaints about how the current financial system operates.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.