You don't need to use any flux and it's just easier/cleaner IMO. Since the only thing exposed to the inside of the forge is the mild steel square tube casing, you can let it soak a good long time at welding heat without worrying about burning it up. Plus adding the powdered steel to fill the spaces in the chain saves a lot of hammering or pressing it down to get rid of all the voids. I've made chain damascus just using flux and hammering and I usually get voids or inclusions but this method makes a nice clean solid billet without a power hammer.
Ariel makes lots of stainless damascus this way, but it works well for carbon steel too.