In this post, I will explain what slashing is in proof-of-stake (PoS) networks and its importance in securing blockchains. Slashing is a ‘cut’ penalty that reduces the value of one’s staked funds as a consequence for either doing something poorly or being inactive which loosens their collateral.
There is only one way to lose a stake: through slashing. For those venturing into PoS blockchains or engaged in it already, understanding slashing is key.
Overview
As blockchain technology advances, proof-of-stake (PoS) has gained traction as a consensus mechanism due to its energy-efficient and scalable benefits compared to the older proof-of-work (PoW) system.
However, some disincentives are needed to safeguard security and integrity within PoS networks from potential harmful behavior.
Slashing, which is widely regarded as one of the most crucial deterrents in PoS systems, punishes validators for damaging or careless actions. What comes to mind now is: What slashing is and what role it plays in PoS systems?
Understanding Proof-of-Stake
Slashing is a concept that can only be understood after one understands how PoS works. In a PoS blockchain, validators are selected to confirm and propose new blocks depending on the amount of cryptocurrency they stake – which is like putting some of their coins on hold as collateral.
This system yields honest behavior via staking rewards, but comes with the risk of loss for acting against the network.
Unlike PoW where computational effort must be applied by miners who maintain the network, POS relies heavily on monetory incentives and punishments. This is where slashing steps in.
What Is Slashing?
Slashing is a feature common among many PoS networks used to discourage security breaches by validators.
Validators who intentionally or unintentionally breach certain set rules will incur repercussions through their staked cryptocurrency referred to as “slashing.”
The slashed portion will depend on how badly the validator misbehaved and the governing policies of the blockchain protocol.
The two most common slashing offenses are:
Double Signing (Double Proposing):
This is when a validator signs two blocks for the same slot or height on the blockchain. It is part of dishonestly competing for rewards because it can cause chain splits or forks which causes major damage and inconsistency to the network.
Downtime or Inactivity:
Failure to carry out stipulated duties such as making block proposals or attestations can result in slashing. Although this type of slashing may not be severe, it still motivates validators to make sure that they are available most of the time and their systems are up all the time.
Why Is Slashing Important?
Security: This ensures participants act in the best interests of the network. Both attacks and participation with malicious intents are discouraged because financial penalties (“slashing”) are applied for misconduct.
Accountability: Reliability and honesty is enforced because slashing allows monetary drawbacks on these vices.
Network Integrity: Harmful behavior like double-signing which could result in forks or instability is countered thanks to consensus maintenance enabled by slashing.
Examples of Slashing in Action
Ethereum 2.0:
Affinity abuse and double-signing are significant “offenses” on Ethereum, and slashing such validators serves to protect their ecosystem. Validators face hefty losses should they part take of the abuses mentioned above. Additional measures like penaltie cap removal for multiple coordinative punishments further reduce chances of colluded attacks.
Cosmos and Polkadot:
These two networks have also implemented slashing for the both infractions of double signing and periods of inactivity over set intervals.
Can Slashed Funds Be Recovered?
In most cases where slashing is applied, the tokens are irrevocably removed. This serves the purpose of emphasizing the importance of maintaining proper validation. Slashed tokens are either burned or redistributed according to a protocol’s rules.
Protecting Against Slashing
- Invest in robust and secure infrastructure.
- Perform software updates, as well as keep an eye on the network’s health.
- Do not run multiple validator nodes.
- Utilize slashing protection offered by staking or node operator services.
Conclusion
In conclusion slashing helps to maintain the security and balance within proof-of-stake networks. Slashing helps prevent validators for acting maliciously and ensures that they are contracted honestly because of the penalties incurred.
With many blockchains moving toward a PoS model , it is critical for everyone from basic stakers to expert validators to understand slashing and its consequences.
