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On-Chain Coordination Mechanisms

While Lit Protocol itself is not a blockchain, it relies on on-chain coordination mechanisms to manage shared state and enforce cryptoeconomic security for each Lit node. This is achieved through Chronicle, an Arbitrum Orbit chain that functions as the protocol’s on-chain registry and node coordination layer.

Chronicle serves several important functions, namely:

  1. Registering Keys and Associated Permissions: Each Programmable Key Pair (PKP) generated by the Lit node network is minted as an ERC-721 token on Chronicle. The permissions associated with these keys are managed via the related smart contracts on-chain.
  1. Node Staking and Rewards: Lit nodes must stake $LITKEY tokens on-chain in order to participate in network operations. Staking and rewards distribution take place on Chronicle.
  1. Service Payments: Developers who integrate the services provided by the Lit network into their own apps pay for the service via the payment contract deployed on Chronicle.

All Lit node operators also run a replica node for the Orbit chain, ensuring Lit’s on and off-chain operations remain tightly synchronized.