Slashing is one of the great risks of staking out at ETH 2.0. Find out here how to avoid it.
One of the most prominent personalities in the decentralised finance community has suffered validator penalties on the Ethereum 2.0 network after a mishap with the power button on his DappNode.
The founder of the DeFi Synthetix protocol, Kain Warwick, reported on Twitter that he had discovered that the hardware of his Ethereum node had accidentally shut down, causing him to lose ETH by „continuous slashing“ for several days. He blamed his young son, or his robotic hoover:
Either my child or my Roomba decided to press the on button and turn off my @DAppNode sometime last week. So I actually lost ETH because of the continuous slashing. Geth has also decided not to start and it feels like one of those moments of erasing and starting over. Ask me anything.
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Although he lost less than 1 ETH and found it more „fun/frustrating than anything else“, this situation highlights the dangers of unforeseen problems for stakers. In Warwick’s case, the problem was solved by turning the DappNode to make the power button inaccessible, but for other users, things are not so simple.
A long discussion on Reddit revealed examples of others who have been penalised for slashing with a debate on the pros and cons of staking in the new Beacon Chain proof-of-stake.
Reddit user „ROCK1006“ claims to have suffered slashing by running two instances of the validator, while another report published by the „Palissian“ user showed the user suffering slashing for a „Proposer Violation“ by running four instances of the validator.
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ETH 2.0’s staking is currently one-way and needs to be locked for at least one year, until ETH 2.0 merges with ETH 1.0 and becomes accessible again.
Slashing is a mechanism designed to protect the network by punishing the validators if they do not perform their task correctly. It essentially serves two purposes, firstly to make attacks on the network costly, and secondly to prevent validators from failing to perform their task or acting maliciously. Being offline for long periods, or accidentally falling below the 32 ETH threshold can result in slashing.
The developer of the Ethereum protocol at Prysmatic Labs, Raul Jordan, published a full blog in November on how to avoid slashing. In it he explains that:
„Slashing removes, or ‚cuts‘, some of the existing staking of offending validators, causing a gradual loss of ETH over time, until the validator is forcibly ejected and marked as SLASHED. This is irreversible.
Configuration errors and mistakes can lead to slashing and one of the most common errors, according to Jordan, is when a user enters the same validation keys on two or more servers.
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He added that another common error is when a user migrates his validator to a different machine or Ethereum 2.0 client. If you forget to relocate and update the slashing protection history, the actions will be duplicated and the validator will be penalized.
There are other risks involved in early participation in ETH 2.0, Cointelegraph has also published guidelines on the dangers of running your own Ethereum node. For these reasons, most ETH retail holders are advised to wait for the emergence of delegated staking services in 2021.