Node License and Staking

1. Introduction

As the decentralized finance (DeFi) ecosystem matures, the demand for reliable data feeds, particularly for tokenized Real-World Assets (RWAs), has become increasingly critical. The Credible Oracle network introduces a unique licensing framework for oracle nodes, which includes a vested stake of $CRED tokens directly linked to the node operator's license. This section outlines the mechanics of this licensing framework, the opportunity for user participation through staking, and the implications of these actions on node reputation and yield.

2. Oracle Node License Framework

2.1 License Structure

Each Credible Oracle node license represents not only the right to operate within the network but also a financial commitment represented by staked $CRED tokens. Key aspects of the licensing framework include:

1. Vested Staked Value:

   • When a node operator acquires a license, they must stake a specific amount of $CRED tokens. This staked amount is vested, meaning it is locked for a predetermined period, reinforcing the operator's commitment to the integrity of data reporting.

2. Duration of Vesting:

   • The vesting period ensures that operators maintain their economic stake in the network over time. After the vesting period ends, the operator can access a portion of their staked tokens according to a linear unlock schedule.

2.2 Staking Opportunities for Users

In addition to the operator’s staked $CRED, the licensing model allows other users to stake their $CRED tokens on the operator's node. This mechanism enables a collaborative effort to enhance the node’s performance and reputation:

1. User Staking:

   • Users can choose to stake $CRED tokens on a specific oracle node, thereby contributing to its overall stake. This pooled staking increases the node’s visibility and credibility within the network.

2. Reputation Enhancement:

   • The total amount of $CRED staked on a node influences its reputation score. A higher reputation score leads to increased trust from the network and can attract more data queries, ultimately benefiting all stakers involved.

3. Yield Mechanism

3.1 Yield for Node Operators and Stakers

The staking framework is designed to provide incentives for both node operators and individual $CRED stakers:

1. Yield Calculation:

   • Node operators earn yields based on the total staked amount, including their own vested stake and the additional staked $CRED from users. The more significant the total stake, the higher the potential yield, benefiting all participants.

2. Incentivizing Collaboration:

   • As users stake their $CRED tokens on a node, the operator can offer competitive yields based on the aggregated staked amount. This cooperative model encourages users to support nodes with higher reputation scores, enhancing network stability and data integrity.

3.2 Periodic Linear Unlock of Staked $CRED

Upon completion of the vesting period, the operator’s staked $CRED tokens are subject to a linear unlock schedule, allowing for gradual release:

1. Unlock Schedule:

   • The release of the staked tokens occurs over a defined period (e.g., monthly over one year), enabling the operator to manage their liquidity while maintaining a vested interest in the node’s performance.

2. Optional Unstaking:

   • After the unlock period, the operator has the option to unstake the released $CRED tokens. However, this decision comes with potential trade-offs regarding node reputation.

4. Reputation Management

4.1 Impact of Unstaking on Reputation

The decision to unstake $CRED tokens can significantly affect the node's reputation and, consequently, its yield:

1. Reputation Score:

   • The node's reputation is directly correlated to the total amount of $CRED staked. If an operator unstakes a portion of their tokens without sufficient additional staking from users, the node’s reputation may decrease.

2. Lower Yield Consequences:

   • A reduction in the reputation score can lead to fewer data queries and, therefore, a decrease in overall yields. This creates a feedback loop where maintaining a higher stake is critical for maximizing the node’s profitability.

4.2 Strategy for Node Operators

Node operators must strategically manage their staked amounts and consider the following:

1. Balancing Liquidity and Reputation:

   • Operators must weigh the benefits of accessing their staked $CRED against the potential risks of losing reputation and yield. Maintaining a higher level of staked tokens will enhance their reputation and attractiveness to stakers.

2. Encouraging User Participation:

   • By actively engaging with the community and promoting the benefits of staking on their node, operators can bolster their stake and reputation, creating a sustainable ecosystem of collaboration.