Chainlink Whale Unwinds Staking Positions After Gaming the System With 100+ Wallets

In 2022, the blockchain project Chainlink rolled out new functionality allowing crypto investors to stake the project’s tokens – letting users

A Chainlink whale is apparently unwinding some of its substantial LINK holdings, a move that could net the trader a hefty profit.

According to blockchain data analysis by Unchained, some 113 staking wallets linked to the trader have claimed their rewards from Chainlink (LINK) staking since November.

Starting on Dec. 29, the Chainlink “whale,” a term used to describe traders with large positions, transferred a total of 280,164 LINK tokens — now worth about $6 million — to Binance, based on analysis by Unchained. The transfer of tokens to a crypto exchange is often taken as a sign that the holder is planning to sell.

The latest transfers took place on Monday when the wallet address sent 20,244 LINK to the crypto exchange.

The whale’s actions suggest that they are capitalizing on LINK’s price increase since the launch of Chainlink staking in December 2022. LINK is trading at $21.27 at press time, up roughly 200% since then.

The Chainlink staking program allows LINK holders to stake their tokens in the protocol in order to contribute to its security performance. These deposits act as guarantees for the performance of the project’s flagship “oracle” — a blockchain-integrated data feed that essentially relays crypto prices into on-chain protocols like decentralized lenders and exchanges. In return for helping to secure the network, stakers earn rewards paid out in LINK.

The LINK whale used one address, which begins with 0x4a4, to receive its LINK holdings from 114 wallets. All but one of them had staked 7,000 tokens. The remaining wallet received 60,244 LINK tokens from stake.link, a liquid staking provider for Chainlink, over the past eight days.

The 113 staking wallets each claimed their rewards between November and January and consolidated their holdings into the 0x4a4 address.

In a blog post from August 2023, Chainlink changed its staking policies to allow a maximum of 15,000 LINK to be staked from a single address. Before the new staking policy, the limit per staking address was 7,000 tokens.

Before the consolidation, the group of 113 Chainlink staking addresses each received their initial tokens from a single address, 0xC54b, which had the name “Oldwhite” on NFT platform OpenSea.

Dispersing thousands of LINK tokens across many wallet addresses appears to have been a way for Oldwhite to “Sybil” the system — a term used when a trader pretends that one entity is actually numerous in order to get around a token limit per staking address, which was set at a maximum of 7,000 tokens per address to “reduce the risk of a few participants dominating the pool in the early stages,” according to a 2022 blog post from Chainlink contributors.

The whale’s LINK transfers to Binance after using over a hundred wallet addresses to earn tokens from Chainlink staking highlight the difficulty in preventing users from employing these Sybil strategies.