Slashing is one of the big risks of staking on ETH 2.0, find out how to avoid it.
One of the most prominent figures in the decentralized finance community has suffered validator penalties on the Ethereum 2.0 network after a mishap with his DappNode’s power button.
DeFi protocol Synthetix founder, Kain Warwick, reported on Twitter that he’d discovered that his Ethereum node hardware had been accidentally switched off which caused him to lose ETH through “continuous slashing” over a number of days. He blamed his toddler, or his robotic vacuum cleaner
So my toddler or my Roomba decided to push the power button and switch off my @DAppNode at some point in the last week. So I’ve actually lost ETH through continuous slashing. Also geth has decided it won’t start and it feels like one of those delete and start again moments. ama.
— kain.eth (@kaiynne) December 8, 2020
Although he lost less than 1 ETH and found it more “funny/frustrating than anything” it highlights the dangers to stakers from unforeseen issues. In Warwick’s case the problem was solved by turning the DappNode to face the wall so the power button was inaccessible, but for other users, things aren’t so simple.
A lengthy discussion on Reddit has revealed examples of others that have been ‘slashed’ with a debate on the pros and cons of staking on the new proof-of-stake Beacon Chain.
One user going by the Reddit handle ‘ROCK1006’ claims to have been slashed for running two instances of the validator, while another report posted by user ‘lapalissiano’ saw the user slashed for a ‘Proposer Violation’ for running four instances of the validator.
ETH 2.0 stakes are currently one way and need to be locked up for at least a year until ETH 2.0 merges with ETH 1.0 and they become accessible again.
Slashing is a mechanism that has been designed to protect the network by punishing validators if they do not fulfill their task correctly. It essentially serves two purposes, firstly to make it expensive to attack the network, and secondly to prevent validators from under performing or acting maliciously. Going offline for extended periods, or accidentally falling below the 32 ETH threshold can result in slashing.
Ethereum protocol developer at Prysmatic Labs, Raul Jordan, published a comprehensive blog in November on how to avoid getting slashed. In it he explains that;
“It removes, or ‘slashes’, a portion of the offending validators existing stake, causing a gradual loss of ETH over time until the validator is forcefully ejected and marked as SLASHED. This is irreversible.”
Configuration errors and mistakes can lead to slashing and one of the most common mistakes, according to Jordan, is when a user inputs the same validating keys into two or more servers.
He added that another common mistake is when a user migrates his validator to a different machine or Ethereum 2.0 client. Forgetting to relocate and update the slashing protection history would result in duplicate actions being taken and the validator being penalized.
There are a number of other risks involved in early involvement in ETH 2.0, Cointelegraph has also published guides on the dangers of running your own Ethereum node. For these reasons, the majority of retail ETH holders may be advised to wait for delegated staking services to emerge in 2021.