How to Stake Chainlink in 2023

Alice Leetham
Alice Leetham
9th May 2023

Chainlink staking doesn’t only help in ensuring the network is highly secure, but it also helps in paying node operators for their services. Most importantly, LINK holders who are staking their coins earn great rewards for helping to grow this crypto network and keeping it secure.

So, what’s Chainlink staking and how does it work? This guide aims to bring light to those in the dark regarding everything related to Chainlink staking. You can scroll down and continue reading for the definition of this concept, where, and how to do it.

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What is Chainlink staking?

Chainlink staking is having your LINK tokens locked up for a certain period. It’s more like savings or a fixed investment traditional bank account where you’ve agreed with the bank to store your funds for a specific period. However, in this case, it’s LINK coins. You can choose to store a certain portion of your coins and keep them locked until the agreed date of access.

What Purpose Does Staking Serve?

Staking helps ensure that the Chainlink ecosystem grows and continues to operate securely. The staked LINK coins become part of ensuring that nodes are operated. This is to help confirm and record transactions without third-party involvement. That way, there are little to no chances of anyone altering the Chainlink blockchain and this eliminates the issue of double-spending.

How Does It Work?

When you stake your LINK tokens, Chainlink puts it to work through the Proof of Stake consensus mechanism. Your coins are used to ensure that transactions are verified. What’s in it for you, the staker? You earn staking rewards for staking your coins, which means you can end up with more LINK tokens than what you initially locked away.

Chainlink staking is unique. As well as increasing cryptoeconomic security, it also ensures the performance and accuracy of Chainlink's oracle services. If an oracle doesn't meet the required standards, then a portion of staked LINK can be slashed and redistributed.

What's more, LINK holders can stake their tokens to support the performance of oracle services. If they believe an oracle hasn't met certain performance requirements, they can raise an alert to earn a reward.

Oracles are entities that connect blockchains to real-world data. For example, an oracle might provide an ETH/USDT price feed that enables you to trade on a DeFi platform, or football match results that enable you to make bets on a crypto sportsbook platform.

Staking vs. Lending
Chainlink Staking Roadmap

There are a few ways you can stake Chainlink tokens. Some are easier than others and we'll talk you through the different options below.

Staking LINK on a Centralized Exchange - Easy

Centralized cryptocurrency exchanges offer the simplest way of staking because exchanges are where you can buy, sell, or exchange cryptocurrencies. On top of that, most exchanges will guide new users on how to use the platform.

Benefits of staking on a CEX

At the time of writing, there aren't any centralized exchanges that enable on-chain LINK staking, as the community pool is currently filled. However, LINK staking through a CEX may become possible after a future release of the Chainlink Staking program.

Joining the Chainlink Staking Community Pool Directly - Intermediate

Chainlink has launched Chainlink Staking v0.1. This is a staking pool that’s open to any LINK holder. It works on a first-come first-serve basis where each member can stake up to 7,000 LINK. The staking pool closes when the 25 million LINK cap is reached.

How the Community Pool works
What you need to join the Community Pool

We'll take you through how to stake Chainlink with various wallets below.

Lending Chainlink on a DeFi Platform - Intermediate

Decentralized finance (DeFi) platforms provide an alternative way to earn interest on LINK and other cryptocurrencies. Through these platforms, you can deposit your tokens for other users to borrow. The interest that borrowers pay provides rewards for lenders.

To access DeFi platforms, you will need to have your tokens in a Web3-enabled wallet that you can connect to your chosen platform. We'll walk you through the process of earning LINK interest on a DeFi platform later in this guide.

Becoming a Chainlink Node Operator - Hard

Launching a node requires one to be familiar with the Chainlink system and to have high-level technical knowledge. Since Chainlink is a decentralized network, it relies on node operators to keep the system secure, confirm transactions, and keep the system running for 24 hours a day.

Requirements for running a Chainlink node
How to run a Chainlink node

Chainlink Staking Options Compared

Centralized ExchangeJoin an exchange that supports LINK. Confirm proof of ID and address. Have LINKDepends on the exchange and staking platform chosen but it’s usually around 4%Counterparty risk
DeFi platformHave an Ethereum Web3 wallet or a hardware wallet that’s supported by Web3 wallets. Have custody to your LINK coins. Enough ETH to pay Ethereum feesVariesSmart contract vulnerability. Liquidity risk
Node OperatorA standard computer. High technical knowledge7% annuallyLockup. Possible protocol security bugs

Learn more about how to stake LINK coins on Coinbase Wallet, Crypto.com, and Ledger.

1. Coinbase Wallet - Best for Beginners

Coinbase is well-known for providing an easy-to-use crypto exchange and plenty of learning resources for beginners. But it also provides a self-hosted crypto wallet that can be used to access thousands of tokens and decentralized applications, as well as NFTs.

You can use the Coinbase Wallet to connect to the Chainlink Staking Community Pool. The benefits of choosing Coinbase Wallet for this are that it has an intuitive interface, uses industry-leading security, and can be linked to your Coinbase account, making it much easier to access and exchange your crypto.

If the Chainlink Staking Community Pool is already full, you may need to wait for a future release of the Chainlink Staking program before you can stake your LINK.

How to Stake LINK with Coinbase Wallet

Before you can get started, you'll need to visit the Coinbase website, download the Coinbase Wallet, and transfer your LINK tokens to it.

Step 1 Visit the Chainlink staking page
Step 2 Connect your Coinbase Wallet
Step 3 Stake your LINK
Visit Coinbase

2. Crypto.com DeFi Wallet - Best for Earning Interest Through Lending

Crypto.com’s DeFi wallet allows you to do LINK lending through Aave Lending V2 which is integrated into this wallet. It’s a simpler way of lending LINK tokens than doing it directly on Aave.

With this option, you won’t have to worry about admin processes like Aave smart contracts or dealing with aTokens. The Crypto.com DeFi wallet will simply display your accrued interest and enable you to easily withdraw your tokans at any time.

As well as accessing Aave, the Crypto.com DeFi wallet also enables you to browse many other apps, store NFTs, swap cryptocurrencies, and benefit from strong security.

How to Lend LINK on Crypto.com DeFi Wallet

The first thing you'll need to do is head to the Crypto.com website, download the DeFi wallet, and buy some LINK or transfer it from another wallet.

Step 1 Open Aave in the Crypto.com DeFi wallet
Step 2 Deposit your LINK
Step 3 Authorize your deposit and start earning rewards
Visit Crypto.com

3. Ledger - Best for Security

Ledger is one of the most popular hardware wallets that enables users to store, buy, swap, and stake cryptocurrencies. It is well-known for its security as it stores private keys offline, making it invulnerable to remote hacking, unlike software wallets.

The Ledger Live app provides a way to safeguard NFTs and explore the world of dApps. The wallet's integration with MetaMask means that you can stake the LINK on your Ledger device in the community pool.

The benefits of using Ledger instead of using MetaMask directly are a more detailed and intuitive interface, customer support, and stronger security. The downside, of course, is that you have to pay for a Ledger device if you want to enjoy these benefits.

If the Chainlink Staking Community Pool is already full, you may need to wait for a future release of the Chainlink Staking program before you can stake your LINK.

How to Stake LINK with Ledger

Before you can start, you'll need to buy a hardware wallet from the Ledger website and create a MetaMask account.

Step 1 Connect MetaMask to your Ledger device
Step 2 Connect your wallet to the Chainlink Staking Community Pool
Step 3 Stake your LINK
Visit Ledger

Chainlink Staking Platforms Compared

Coinbase WalletCrypto.com DeFi WalletLedger
🏆 Reward rate4.75% annuallyVaries4.75% annually
⌛ Payout frequencyLocked until Staking v0.2 launchDailyLocked until Staking v0.2 launch
⚠️ Staking limits1 to 7,000 LINKNone1 to 7,000 LINK
💰 Staking commissionNone0.5% per withdrawalNone
#️⃣ Total number of cryptos eligible for staking5+ directly on Coinbase, many more through dApps with the wallet30+20+ directly with Ledger

The amount of money you can make by staking Chainlink is influenced by several things. It varies based on the option you choose for staking this coin. A person staking on an exchange platform can make less than those staking directly in the community pool or operating a node.

However, other factors can affect the outcome including the rate, how long you stake for, how much you stake, and the price fluctuations of LINK. Fees can also be a factor and an issue as some node operators have complained about the high Ethereum gas fees.

At the time of writing, the stated staking reward rate for participating in the community pool is 4.75%. This means that if you staked 1,000 LINK, after a year you should have 1,047.5 LINK. Note that the reward rate may be adjusted with future releases of Chainlink Staking.

Before you start staking LINK coins, we’ll make you aware of some disadvantages associated with Chainlink staking.

  • Slashing. The most common penalty for Proof of Stake validators that don't meet the required performance standards is that some or all of their staked coins get "slashed", ie confiscated, and this loss may be passed on to their delegators. However, slashing won't be introduced until the release of Chainlink Staking v1.

  • You’ll have no access to staked LINK. In most cases, you’ll be able to see the balance of your stake but can’t access or use it until the staking period is over. It’s only when that period is over that access will be enabled and your LINK coins and rewards are unlocked. This is unless you opt for the lending on the Crypto.com DeFi wallet, which enables you to retrieve your LINK tokens any time.

  • Long lock-up period. The community pool Chainlink Staking v0.1 will have your LINK coins locked up for a period of between 9-12 months.

  • The minimum requirements can be high. This is especially more so for community pool and node validator staking options. The community pool requires your LINK tokens to be stored on a Web3 wallet, that you have custody of your tokens, and have enough ETH to pay Ethereum fees. Then with node validating, you’ll need to have the high technical knowledge to complete the tasks, as well as 50,000 LINK.

  • Price volatility is an issue for many cryptos including Chainlink. It fluctuates unpredictably and this can be a great influence on your total earnings when you come to sell your tokens. This means that you might not end up with the desired amount or at least what you calculated with the value of the LINK tokens you initially staked.

  • Security is a constant issue for anything done online, specifically those that capture one’s data and funds. Even though crypto platforms and the blockchain are protected by layers of security, there’s a chance of its security being compromised, your data getting leaked, and loss of funds.

  • Chainlink is not as popular as other digital currencies so it can be difficult to find it on exchange platforms, let alone staking it.

If you’re trying to decide whether or not to stake Chainlink, then we hope that the above information has helped you get to that decision. Just like when you’re opening a fixed investment account in a traditional bank, put away a LINK value you know you can do without for a very long period.

If you’re Chainlink staking on an exchange platform, choose your products wisely by checking their reward rate, lock-up period, and other terms of use. Don’t go for an option with requirements you can’t meet or that you feel will put you at a disadvantage in the long run.

The final decision is up to you, the LINK holder, and what works for you. If you aren’t sure about that, you can consider the following before making your final decision:

  • Risk vs. reward. Weigh up the reward rate and the risks detailed above, and decide whether staking fits your personal financial situation and risk tolerance.

  • Are there any tax implications? With cryptocurrencies being regulated now, you have to be aware of the tax charges on crypto income in your state. This way, you’ll have an idea of the final amount you’ll receive after tax.

  • Think about your technical skill level. This should help you decide whether to stake and how. Operating a node requires a lot of technical skill. If you just want to join the community staking pool, you need to make sure you understand how to set up and use a private wallet. Staking through a CEX requires hardly any skill.

  • Choose a platform wisely. When choosing an exchange or wallet to buy, store, or stake tokens, do some research into its reputation, security, and regulatory status to make sure you keep your assets safe.

  • There are other options. If you’re new to crypto, you can explore other options to make use of the crypto you’ve bought. These include trading, selling, lending, and other products you can partake in using exchange platforms.

  • Stake what you can afford. Remember that with cryptocurrency, you should only buy, exchange, or stake what you can afford to lose. Coin prices are unpredictable and they have seasons where they drop and stay low for a while.

Final Thoughts

Chainlink staking is having your LINK coins locked up to help keep the Chainlink system secure and running smoothly. You have to be a LINK holder to be able to start staking. There are a couple of ways to stake your LINK tokens including through crypto exchanges or apps, by joining the Chainlink staking community pool, or by becoming a node.

There are a couple of cryptocurrency exchange and wallet platforms where you can stake Chainlink but the top three are Coinbase Wallet, Crypto.com DeFi wallet, and Ledger using the MetaMask app. These are regulated and available to US citizens. Coinbase Wallet is number one on the list as it’s beginner-friendly because of its simple user interface and guides.

Chainlink staking is still evolving, and we could see many changes in the future. The launch of Chainlink staking v0.2 is expected in the second half of 2023 and will enable unstaking and the potential for new stakers to join in. After that, v1 and v2 will see staking expanded across the network and the delegation, penalty, and rewards systems fully fleshed out.

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Author Bio
Alice Leetham
Alice Leetham
Alice is a content writer and editor at Bankless Times. As a cryptocurrency and content specialist, she has reported on crypto news, produced user guides, and crafted content for exchanges. She has first-hand experience in trading and investing, and in her spare time, she writes the puzzle page for a regional magazine and rings church bells.