Chainlink has a busy start to December when it comes to development releases. The Chainlink (LINK) staking program opened for early access on December 6 and will expand access on December 8.
According to Chainlink, the staking will further secure the project’s node ecosystem and alert mechanism:
“Participants gain access to participation rewards for protecting the network through timely and valid alerts and, in the future, for protection against outages and losses.”
Historically, mainnet launches and participation incentives spark a flurry of blockchain activity and data from onchain analytics firm Arkham shows a sharp increase in activity.
Chainlink Staking went live 19 hours ago. USD LINK Marines have flooded the contract with their deposits exceeding 11M Chainlink tokens.
Meaning, over USD 77.7M of USD LINK has been deposited in the contract currently.
The first, and largest, deposit so far was 500k LINK or USD 3.64M. pic.twitter.com/aB6elCM5PE
—arkham | Crypto Intelligence (@ArkhamIntel) December 7, 2022
While node providers were granted access on Oct. 3 with unlimited terms, Chainlink’s early access staking capped total stakes per person at 7,000 LINKs. Despite this cap, the staking program has picked up steam, far exceeding 11 million LINKs staked on December 6th.
The next phase of participation takes place on December 8th, which reduces the minimum amount of participation from 1 to 0.1 LINK and the overall participation program is currently capped at 25 million LINKs.
Even with solid traction since the early release of public participation, LINK’s price has corrected, losing 4% since December 6.
Higher LINK issuances could scare investors
To encourage early adoption, Chainlink set a minimum issuance amount for the program. Expected emissions for those in the staking program are a minimum of 5% APY for the community and 7% APY for node operators. Community participants are also expected to lose a 0.25% fee for node operators. Due to these terms, there is a possibility that LINK could become hyperinflationary without sufficient fees to support the rewards.
Although staking rewards are locked in for 9-12 months, LINK’s pricing has not responded well to development updates.
After hitting a 30-day high at $9.30, the LINK price fell to $6.80 on Dec. 7 after the stake was released. The drop comes despite a large increase in mentions on social media.
According to Cointelegraph’s head of markets, Ray Salmond:
“Cryptocurrency prices are down across the board, likely due to traders taking a risk-off stance ahead of the FOMC meeting on December 13 next week. In a more granular view, mainnet updates and staking releases tend to exhibit a buy the buzz sell the news dynamic and what we see in LINK pricing does not defy the norm. At the same time, we may see ApeCoin also pull back on the eve of its staking launch. From a technical analysis point of view, the LINK price remains in its 211-day range between $9.50 and $5.60. While the price is below the midline of the range, it is currently testing the 20-day moving average and previous corrections found support at $6 and $5.50.”
While LINK’s staking program may be beneficial to the longevity of the Chainlink ecosystem, the market is currently responding negatively.
As developments and updates continue, investors may begin to understand betting dynamics more deeply, and if LINK’s issuance proves to be sustainable, the initiative could prove beneficial to investors and the ecosystem as a whole.
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