Once you have staked your LINK, you are contributing to the network's security. In return, you will receive rewards in the form of newly minted LINK. Conversely, if you do not participate in staking, your assets will get diluted over time.
The validator you delegate your tokens to is not able to access your funds at any point in time since you are only delegating your staking rights. At no point in time, do we have control over your LINK or your private key.
While not implemented yet, it is intended that validators and their delegators are subject to punishment in case of malpractice. This is referred to as "slashing" and can occur in the wake of two events: the node operator being offline for too long or malicious behaviour by the operator.
Only in case of ‘excessive downtime, then up to three months of accrued staking rewards can be slashed from node operators currently serving the ETH/USD Data Feed on Ethereum’, slashing is applicable. ‘Actively staking node operators who are not serving the ETH/USD Ethereum Data Feed will not see their rewards slashed during v0.1. More information can be found in a recent blog post.’
Exact parameters and details are yet to be released.
According to Chainlink, the smart contracts for v0.1 have been audited several times by independent auditors.
Further risks include: key/asset mismanagement by the enduser resulting in loss of funds; protocol errors; or attacks against the network.
In v0.1, staked LINK & accruing staking rewards are locked up in a smart contract and hence not directly sent to you. With v0.2, which is expected to de released in 9-12 month as of Dec. 2022., the illiquidity of your stake and rewards is expected to be changed.
Since the current stake pool is full, no more stake can be added. Once this changes, we expect information on how one can increase their staked LINK.
Unfortunately we cannot answer this question in a general manner as tax regulation differs among legislations. Nevertheless, we advice you to always track your staking operations so you can provide a detailed history of your staking rewards.