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by Finage at October 13, 2021 4 MIN READ
The Chainlink 2.0 is an effective and secure way of performing secure off-chain computations. The innovations allow Decentralised Oracle Networks to provide smart contracts securely. This capability allows for a wider array of services. With this innovation, there is a better chance of creating smart contracts using both on-chain and off-chain resources without the challenges that come with security.
With more people accepting cryptocurrency, more emphasis is being placed on security. Cryptocurrency relies on hybrid smart contracts. The Chainlink 2.0 is promising to be the perfect software for the cryptosecurity needs of users. This article will give a brief insight into what explicit Staking in Chainlink 2.0 is about and why it is important.
Why Is Explicit Staking Important?
Explicit Staking is a system for cryptocurrency development that emphasizes removing malware through Chainlink 2.0 nodes. This security system is designed to combat a broad range of adversaries. It is especially useful for superlinear staking impact which focuses on highly funded malware.
Therefore, it creates a very secure environment for smart contracts which is cost-effective as well. So why is Explicit Staking in Chainlink 2.0 important? The main benefit of explicit Staking is the better security it provides. This also ensures that users have access to reliable reports that are not corrupted. Explicit Staking comprises different entities that work together to generate the desired level of crypto-economic security.
For Explicit Staking a two-tier oracle network is used. This ensures that the service agreement is observed to the fullest. The first tier DON is highly efficient and cost-effective. It consists of nodes that provide LINK tokens. Therefore is designed to generate oracle reports regularly.
The second tier DON provides maximum security and thus has a higher cost. It is used to overcome any disputes that may arise. These disputes are usually about the validity of oracle reports. So a two-tier system ensures that any malicious behavior from first-tier networks is identified and removed.
Each Decentralized Oracle Network (DON) comes with a service agreement. This is significant as it shows how many LINK tokens the oracle node will have. The LINK tokens determine how many requirements a node can perform.
Service agreements also determine data sources, frequency of updates, and payment policies. The service agreement of a Decentralised Oracle Network also determines how reporting will be done as well as how the node's stake can be slashed. When creating a service agreement, any nodes can be chosen depending on reliability and reputation.
Even though there rarely is any dispute, Chainlink 2.0 provides a better assurance for users should such a situation arise. If a dispute arises, the second tier has a committee that decides the outcome. This committee is made up of independent Chainlink users. These users vote on the authenticity of oracle reports.
Applications rely on accurate reporting. If any dispute arises, the first-tier oracle network should be called into action. WatchDogs are needed for this to be possible. Any first-tier network can work as a watchdog. Low priority nodes can also act like watchdog reports. WatchDogs raise alarms if any incorrect report is detected.
During the report stage, all networks are assigned numbers that determine priority. So the networks with the highest priority numbers. This means that their alerts will be processed first by second-tier oracle networks.
The watchdog node alerts the second-tier network of any issues. The second-tier network will then determine if the original report was incorrect. It will also produce the correct report. Consequently, any corrupted nodes will be removed by the watchdog. If a report is determined as incorrect, the watchdog node will have a higher slashed stake. This ensures security is maintained.
Explicit Staking uses a rewarding system. Watchdog reports determine rewards. This results in a superliner staking impact which means that the budget for malicious programs increases as the number of nodes rises. Hence there will be maximum security even for the best-funded adversaries. If lower priority nodes raise an alarm, they earn a slashed stake which increases priority.
However, that only happens if a higher priority node did not alert second-tier networks of an incorrect report. Malicious programs can overcome first-tier nodes only through a bribe. So when a node is given more rewards it increases security as the amount needed to corrupt the watchdog node increases.
The Chainlink 2.0 through explicit Staking promises to propel the next generation smart contracts to provide more security cost-effectively. With the possibility that smart contracts will become the most secure way of making digital agreements, providing higher security will be of utmost importance. This provides users with more insurance about agreements, delivery, and security of oracle dependent reports. The Chainlink Network can work to support hybrid contracts that thus increase their value.
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