Discouragement of Malicious Practices in Crypto via Slashing

Despite the absence of a central managing entity, blockchains work on a specific code of rules and regulations (i.e., consensus mechanism) that ensures their security. This mechanism rewards validators on their excellent behavior, while malicious validators face the wrath of a penalty called ‘crypto slashing.’

Slashing, a central security element of proof-of-stake (PoS) blockchains, works against validators who accidentally or deliberately breach security protocols, while submitting block proposals and attestations.

Crypto Slashing & its Working Mechanism

Validator nodes are active participants of a proof-of-stake blockchain network that earns money by verifying transactions and creating new blocks. To participate and show proof of their loyalty to the network, validators stake a certain amount of the blockchain’s currency. This personal investment serves as collateral and also incentivizes the validators to act honestly.

Nonetheless, detection of malicious behavior by the consensus mechanism incurs slashing that involves deducting a predetermined percentage or a potentially significant amount of validator’s stakes. Regarding the extent of the punishment for being slashed, some protocols employ complete slashing of stakes. In contrast, others execute direct ejection of the validator from the chain either for the ongoing epoch or permanently.

To curb dishonest validations from the validators and incentivize security in the blockchains, some crypto ecosystems, e.g., Polkadot and ETH2, steered towards correlated slashing. This kind of penalty works on the principle of keeping the punishment light for individual incidents. However, its severity escalates with the percentage of total validators involved in destructive actions simultaneously..

Behavioral Causes that Trigger Crypto Slashing

Crypto slashing in most of the networks is triggered by two key behaviors, namely: downtime, and double-signing.

Since validators are expected to be online on the network continuously, their absence (offline status) for extended periods is called downtime. Their non-availability delays block production and endangers the system’s security. Protocols such as Cosmos validator’s nodes with a downtime of more than 5% of the last 10 000 blocks (approximately 13 hours) face a slashing amount of 0,01%.

Another trigger that is highly likely to be punished by slashing is double-signing, i.e., when the network detects the same validator nodes running from two different servers. Double-signing is considered as an offense by many PoS protocols since this behavior is detrimental for networks to reach their consensus. For example: the slashing amount for double-signing in the case of Celo is 9,000 CELO tokens, along with removing the validator from the group.

Andrew is a blockchain developer who developed his interest in cryptocurrencies while his post-graduation. He is a keen observer of details and shares his passion for writing along with being a developer. His backend knowledge about blockchain helps him give a unique perspective to his writing