The Slashing Penalty mechanism only slash stakes of those validators who intentionally attack the network. Those validators are called Malicious validators. The validator can neglect the Slashing Penalty mechanism by following the correct protocol and never intentionally attacking the network. The validators under the Ethereum Proof of Stake (PoS) blockchain can earn rewards for being truthful and honest because of the rewarding mechanism. Also, if the validator performs some malicious behavior, it must go through a Slashing Penalty mechanism. This blog is focused on Ethereum, which works on the Proof of Stake (PoS) blockchain but the Proof of Stake (PoS) also supports some other cryptocurrencies like Cardano, Tron, Tezos, and Fantom node.
Before we dive into Slashing Penalty, let’s understand how staking works and why validators go through Slashing Penalty?
How does staking work in Ethereum?
The Proof of Stake (PoS) blockchain bundles 32 blocks of transactions under each validation, lasting 6.4 minutes. Those bundles of 32 blocks are known as “Epochs.” An Epoch is considered the final block, which is irreversible; after that, the blockchain adds 2 more epochs.
During the attesting process, also known as validating process, the Beacon randomly selects a group of validators, also known as stakers which is a committee of 128 members and assigns the committee to a specific shard in the blockchain.
Each committee holds a set time for proposing and validating transactions inside a new block called a “Slot.” There are a total of 32 slots under each epoch which means there is a need for 32 committees to complete the validation process/attesting process in each epoch.
Once the assignment is submitted to the committee, one committee member is selected randomly to propose a new block of transactions in the blockchain. The other 127 members must vote on the proposal and attest to the transaction.
Once a committee has attested a new block in the blockchain majorly, the cross-link is created for the insertion confirmation in the blockchain.
As Ethereum works on the Proof of Stake (PoS) blockchain, the same protocol is provided by various companies like Zeeve.
Slashing Penalty Purpose –
Slashing Penalty discourages malicious validator’s behavior which increases the system’s security and participation of honest validators/whistleblowers. There are 2 reasons why Slashing Penalty is active, and they are –
- Make it expensive to attack malicious validators on the network.
- Validators should be active and know their responsibilities.
Thus, there are 2 reasons why validators are charged, and there are major and minor reasons. Major reasons are termed under Slashing Penalty, and Minor reasons come when the validator is offline or unable to sign transactions.
Thus, the Slashing Penalty mechanism also comes with a rewarding mechanism and rewards those validators who detect malicious validators, and thus, this helps to retain the best validators.
4 Major reasons for Slashing Penalty –
Validators can get Slashing Penalty for 4 reasons –
- If a validator starts acting like a proposer for signing 2 different beacon blocks on the same slot.
- If a validator starts acting like an attester for signing 2 different attestations for the same target.
- If a validator maliciously attacks the network through double voting.
- If a validator attests one version to the beacon block and later attests to another beacon block, this creates confusion which is known as Surround Voting.
Minor penalties for being offline –
The Penalty for being offline on Ethereum can impact a validator by losing 15.8% of their stake in a year, approximately 1.4% of stake for being offline for a month, and approximately 0.3% of stake for being offline for a week.
Role of Honest Validators –
Suppose a validator is affected by a Slashing Penalty, and the balance of the validator drops to or below 16ETH. The validator is forced to exit the beacon chain, Ethereum 2.0, in the future.
The honest validators which are also known as whistleblowers can detect such malicious action and, by signing a message, can report the action. A proposer validator processes this message within a block of the network. And, upon agreement of the network, the honest validator receives a slashing reward for detecting malicious action.
Slashing reward is the long-term incentive mechanism designed for Honest Validators to keep the system secure and detect those malicious and dishonest validators. Once detected by the honest validator, the malicious validator goes through Slashing Penalty. You can see the list of slashed validators here.
