Slashing is a common penalty in proof-of-stake networks. Reliability and availability are hard to maintain at the best of times. It’s even more difficult with the current global supply chain issues and component availability.
Even Blockdaemon recently suffered a slashing. Albeit, a minor one.
It was our first ever slashing and we’re taking it as seriously as possible. It didn’t impact any of our customers, but it does beg an important question.
If even the leading infrastructure provider can get slashed, how safe are your staked tokens?
Slashing in Proof-of-Stake Networks
Slashing is a penalty imposed on inactive or delinquent validators. When you are slashed, a network can remove some or all of a validator’s staked tokens. The severity of the penalty depends on which rules a validator broke.
For us, it started a few weeks ago. Our monitoring system correctly flagged a potential failure. One of our Cosmos validators was showing signs of potential degradation. However, despite doing everything possible, we were unable to respond quickly enough.
We placed an order for replacement components, but global supply-chain issues worked against us. We were unable to perform the upgrade in time and our validator failed. We were slashed 0.01% of staked tokens, for inactivity.
As always, Blockdaemon provided 100% slashing insurance and no customer was affected. Would you be as well protected if your validator failed?
Blockdaemon Advanced Monitoring Did its Job
Our monitoring had warned us weeks ago. We needed to update one of our Cosmos validators.
Blockdaemon monitors the metrics that matter. We look for the early warning signs, to get ahead of the game. We don’t wait for a component to fail.
Once our monitoring solution flagged an alert, we quickly took action. We ordered new, best-of-breed hardware and planned the upgrade. As always, we built additional time into the plan but unfortunately, circumstances worked against us.
We Could Not Secure the Necessary Hardware
The shipment was unexpectedly delayed by global supply chain issues. Even with this delay though, we still had time. We checked the suspect validator repeatedly. We knew we needed to act quickly, so we replanned the upgrade with the new due dates.
We were then hit with further delays. There was just no way to get the necessary component in time. We were placed into a difficult situation. We pride ourselves on the accuracy of our monitoring, but we couldn’t respond in time.
Once again, our monitoring proved to be accurate. Our validator failed exactly as predicted
We were only penalized by 0.01% of the amount staked with a single validator. To say it was a minor event is an overstatement.
However, rather than run away from this, we have used the slashing as motivation to increase our stock of spares and build further redundancy. Hardware just isn’t as readily available as it once was.
Our Customers Were Not Affected
Unfortunately, the problems we faced were beyond our control. However, Blockdaemon always looks after our customers.
We guarantee 99.9% uptime. Furthermore, we have a security-first approach that includes 100% slashing insurance. No Blockdaemon customers were affected by the slashing.
Are Your Staked Tokens Protected?
Do your staked tokens have the same safeguards?
If you are running your own validators, they probably don’t. That’s a big risk to take.
As mentioned, if we can get slashed then anyone can. We have class-leading monitoring and highly-skilled engineers. Even we could not act fast enough.
Global supply chains are causing chaos across the board. They could easily affect your blockchain nodes. Even without that additional pressure, nodes fail for a variety of reasons including…
- Node crashes due to load spikes
- Nefarious action (hacking)
- Software crashes
- Component failure
- Human error
If your node goes down, your inactivity could be penalized.
Slashing Can Happen: How to Protect Your Stake
If you were to get slashed, even just a small percentage, how much would it affect you? How would it affect your customers?
If this would cause a loss of earnings, or reputation, wouldn’t you rather protect yourself?
Luckily, it is possible to protect against slashing. If you implement the following steps, your stake will be safe:
- A resilient network connection
- Advanced monitoring and failure prediction
- A complete inventory of redundant components
- Take out slashing insurance when events conspire against you
Alternatively, you can choose an infrastructure provider with all of these already in place.
Blockdaemon host over 10,000 nodes for some of the biggest blockchain companies. We have only been slashed once, and we are 100% insured.
Why not give your business, and your customers, the same protection?
To protect your stake against slashing, get in touch with Blockdaemon today.