The Skills You Will Need to Become a Chainlink Node Operator

Chainlink node operators, either individually or collectively as a wider team, need a range of skills across multiple domains. At least if they are to be successful in running their Web3 infrastructure company. In this article, we include as many skills as possible which we believe can be critical to success as a business node operator.

Technical Skills Chainlink Node Operators Need to Cover

Some people might have the image in their head that node operators are mostly nerdy guys who spend day and night behind their computers. While this is a very clichéd stereotype, of course you still need a lot of technical skills to run a successful IT business.

General DevOps

If you have ambitions to become a professional Chainlink node operator, the following areas of DevOps engineering will sooner or later play a role:

• Linux command line

• Building from source

• Container orchestration

• Infrastructure as Code

• System maintenance

• Backup management 

• Monitoring and alerting 

• Troubleshooting and debugging

As you may know, each of the points listed is, in turn, a deep rabbit hole that you can explore for years. A good general and comprehensive understanding is essential for the successful operation of Web3 nodes.

Cybersecurity

As providers of key infrastructure for the Web3 industry, Chainlink node operators must meet the highest possible security standards. Due to the disruptive properties of decentralized technologies and the associated rapid growth and value creation, Web3 projects are a particularly lucrative target for adversaries. Knowledge, constant development and adaptation in this area are crucial for Chainlink node operators to neutralize any attack vectors. The absolute basics include the following areas:

• Secrets management

• Identity and Access Management (IAM)

  • Internal VPN

  • User and group management (SSH authentication)

  • Firewall 

  • DMZ

• Reverse proxy servers (TLS-encryption)

• Auditing

High Availability

Avoiding downtime is crucial to qualifying as a verified Chainlink node operator. Therefore, you must have clearly regulated and tested processes in place if there are problems with your primary infrastructure. To maintain uninterrupted service and minimize the impact of outages, you better keep your emergency failover system on hot standby.

• Health checks

• Failover management

• Load balancing

Decentralized Technologies

Logically, you cannot survive as a Web3 infrastructure provider without dealing deeply with decentralized technologies.

The Basics

• Understanding the concepts of blockchains, smart contracts and oracles

• Chainlink node operators need to have a profound understanding of the networks with which their nodes are intended to interact

Interacting with Smart Contracts

• Multisig wallets: necessary to securely handle access control of company assets

• Withdrawal, trading and transferring of funds

The Correct Use of Hardware

• Hardware wallets should be used for admin accounts and other important accounts for internal operations

Optional Technical Skills

The following skills are beneficial, but not essential, to Chainlink node operators:

• Python (analysis and automation scripting)

• TypeScript (widely used for developing Chainlink External Adapters)

• Golang (Chainlink core software and RPC node client language)

• Solidity for smart contract development, together with: Vyper, Yul, Huff, Rust

Business Skills That a Chainlink Node Operation Requires

Working as a business node operator involves setting up a company that fully complies with the relevant jurisdictions of the underlying place of incorporation. Day-to-day business therefore includes all business processes that other companies also have to deal with. Depending on the scope of your activity and your experience in these areas, it is strongly recommended to consult business professionals to ensure high efficiency and compliance.

Financial Management

Without the necessary financial skills, not a single company can survive in the long term.

Expenses of Chainlink Node Operators

Chainlink node operations incur several one-time and ongoing costs, the amount of which depends on various factors. Therefore, it is extremely important to carry out structured financial planning on an ongoing basis. We will soon create a detailed overview of the expected expenses in a separate blog post.

Chainlink Node Operator Income and Cryptocurrency Exchanges

Chainlink node operators are paid in LINK tokens for providing their services; however, as things stand today, it is unavoidable to pay certain expenses in fiat currencies and as such a fiat on/off ramp is required. Additionally, certain other assets which are required, for example, to pay transaction costs on newly integrated networks, can sometimes only be purchased or exchanged on centralized exchanges (CEXs). Opening a business account with a CEX may in turn be accompanied by comprehensive KYC/AML processes, for which you should be prepared and have all documents in place.

Knowing How to Stay Liquid

In addition to being paid in LINK tokens, Chainlink node operators may have crypto expenses to pay for transaction fees and are therefore unavoidably exposed to volatility in crypto asset prices. Reward payments for verified node operators on the Chainlink Network take place on a regular basis and can be subject to considerable variability depending on market conditions and node performance. Node operators must therefore have a strategy to remain liquid and resilient to unexpected events.

Complex Taxation and Accounting

The issue of ongoing accounting and taxation should also be carefully considered in business planning. It is important to remember that every on-chain action is immutable and forever traceable; accordingly, it is advisable to consult experts in your jurisdiction who can help you operate in a fully compliant manner in this regard. The number of on-chain transactions varies greatly depending on the node type and network – this could be anywhere from 5 transactions per day per node, for example, to 5000.

It is also always helpful to understand basic micro and macroeconomic concepts to plan for the profitable use of company resources.

As you can see now, the financial management of a Chainlink node operator is pretty unique and complex. Since the Web3 is still young and a niche, you have to adapt flexibly to new situations, solve unknown problems and contact good advisors.

Legal

In the legal area, it is recommended to be thoroughly logically informed prior to founding the company and think about which laws and regulations you will be subject to as a Chainlink node operator. This is not always easy in view of insufficient clarity in early crypto regulations, with some way to go toward achieving a robust regulatory framework, but here too there are specialized experts whose assessments you should seek to obtain. It is advisable to do this on an ongoing basis so as to keep up with rapid developments in the sector and maintain a proactive approach.

In addition, you will likely enter into various service-level agreements with hosting providers, data providers and other entities as a business node operator, so it is a prerequisite to have the ability to examine and understand contract terms and their implications.

Marketing and Reputation Building

Running a Chainlink node is a digital business and so it follows that a strong understanding of digital content marketing is highly beneficial. As adoption increases and the secured value grows exponentially, the participating oracle nodes for specific networks are becoming more and more scrutinized. Therefore, it is important to provide quantifiable evidence as to why a node should be included in a decentralized oracle network (DON).

Examples of metrics which could set a node apart include strong uptime guarantees, consistently accurate oracle reports, and access to varied data sources. Reputation is incredibly important within Chainlink DONs. Node operators are paid in the LINK token, which will be an even bigger key differentiator in the form of stake with Economics 2.0. Given that network security scales with the number of nodes, it is also beneficial to collaborate with other teams so as to build mutually effective relationships, potentially resulting in access to other opportunities or expertise.

Soft Skills a Chainlink Node Operator Business Needs

Last but not least we listed the most important soft skills you will need to be a successful Chainlink node operator.

Stress Resistance 

Chainlink node operators are expected to be present and responsive 24/7/365, ready to resolve issues, apply hotfix updates and add new jobs at any time. The ability to work under pressure during unsocial hours and with short deadlines is a must.

Flexibility

The Web3 space evolves rapidly and by extension so does the Chainlink ecosystem. Situations can have fundamental changes from one day to another, so adapting to unknown circumstances is another must.

Communication 

Node operators need to communicate with the Chainlink Labs team and other node operators all the time to debug issues, improve their nodes’ performance and thus the reliability of the whole Chainlink Network.

Conclusion: You Better build a Solid Team

Serious business node operations designed to scale with the Chainlink Network can hardly be managed by a single person. Not only because of the huge skillset, but also because of the needed time and effort.

If we only could give you one advice on how to increase the chance of succeeding as a Chainlink node operator it would be:

Build a cohesive geographically distributed team with people who are highly skilled in the most relevant fields mentioned above.