It IS 100% definitely degrading. You really need to be on good water at >1.4v if you don't want any degradation (besides what many, many chips will do from their first initial power on's....I saw a 2500k that loaded windows when brand new (First boot) at 1.29v @ 5 ghz, but wouldn't do it on the second boot...needed 1.31v, then at the end of the day, even THAT didn't work, and it needed 1.33v. It eventually settled at 1.35v and remained there long term). But I think people are getting totally overblown over what degradation is, as the chips can "degrade" at lower voltages slightly, too, as I just explained.
These chips can and DO lose their lowest voltage floors at certain overclocks, after they are run for awhile. How much this happens depends exactly from chip to chip, but it definitely can happen. A minor 5C increase in ambient temp is not going to cause the voltages to need 0.020v more. Both of my 2600k's have degraded slowly (I'm currently deliberately frying the first one now at 5.3 ghz 1.58v); my second one used to only need 1.404v-1.416v loaded for 5 ghz, now it needs around 1.440-1.452v. What caused it? Repeated priming to try to get into the 5 ghz club. And it was NOT rise in ambient temperatures either.
I tested this by going back to 4.5 ghz which used to just need 1.236v load for hours and hours of prime. Now I need 1.260v load for 12 hours prime stable (tested it three times for 36 hours at the 1.260v). That 1.236v BSOD's within minutes now.
The chip never degraded except when I started using it at 5 ghz. All it took was several hours of prime attempts (maybe 12 hours total) at 5 ghz and 1.404v-1.416v load, and a bunch of hours of Bad Company 2 (at around 1.428v load) for it to happen. I'm hoping it has settled at 1.440-1.452v load now. I did leave it idle for 6 hours (had a idle bsod with 1.428v idle, so raised the LLC2 idle voltage to close to 1.440v), then went back and did another 4.5 ghz 1.260v load 12 hour Prime test, which passed fine, but its hard to say if it has settled or not (note that 1.255v BSOD'd in about 9 hours even before the last BC2 barrage and before I did the 3 x 12 hours of 1.260v blends)
I'll find out later when I switch back to that chip, and if I get a idle BSOD at 1.420v set in BIOS with LLC2, at 5 ghz. If I do, then a bit more degradation....
Degradation is real and can happen in a month, easily. Doesn't happen to everyone the same way, but it can happen.
And this degradation is basically the chip needing higher vcore to run at the same clock. The chips usually degrade awhile at a certain vcore, and then level out and stop needing any more vcore increases. But how much a chip will degrade is based directly on the voltages used.
Instability is instability, my friend. Like I said, my 2600k ran on 1.26v for two weeks and then couldn't do it anymore. Had to bump it to 1.35v for maximum stability so far.
Yep your chip degraded also, but at these lower voltages, the proper term is more like "breaking in" to level out at a voltage where it will remain stable long term.
I'm deliberately frying my first 2600k just to accelerate this degradation and to see at what voltages the chip will settle down in (at lower overclocks) after it's been subject to massive abuse at 5.3 ghz and almost 1.6v on air. Already seen some more degradation by this; 4.5 ghz @ 1.29v, which used to be stable on this one, now will BSOD in under 30 minutes of prime blend even at 1.303v.
Once my 5.3 ghz won't be able to run games at 1.6v anymore (due to bsod's), I'll back it down to 5.2 ghz, then 5.1, etc, and keep adjusting vcore (higher/lower as long as I don't go above 1.6) to see if or when the chip's vcores settle (at 4.5 and 5 ghz). At the very least, i will have learned something nice.
BTW one person folded 24/7 at 5 ghz 1.52v for three months, and now his chip can't do higher than 4.6 ghz at that voltage.
There are a bunch of other people (in the P67 Gigabyte review thread) who also saw degradation after awhile (like a week or two) of priming tests and other usage, at just 1.3-1.35v. So yes, it happens, folks. But it shouldn't KEEP happening forever unless you're at very high voltages.