Slashing and Penalties
In a Proof of Stake blockchain, validators are monitored under strict scrutiny to maintain the integrity, decentralization, and consistency of the network. When a validator becomes dishonest, it risks punishment in the form of slashing or penalization. Although both concepts are used interchangeably, they refer to two different mechanisms.
| Action | Occurence | Reason |
|---|---|---|
| Slashing | Validators commit provable malicious acts. | Punitive Measure |
| Penalty | Validator fails to perform their duties. | Corrective Measure |
Slashing
If a validator behaves inappropriately on the network, like suggesting two different blocks or distributing two different attestations, the validator is slashed by active participants on the consensus network who run a slasher service. The proof of detected misbehavior is then included in the proposed block and a portion of the slashed amount redistributed to the publisher.
More details about slashing abilities and software can be found on the Slasher Service page.
| Offense Type | Description |
|---|---|
| Submitting two different blocks for the same slot. | |
| Creating an attestation that encloses a previously submitted one. |
The surround vote occurs when a validator makes an attestation which coincides with a previous one. An example would be to vote on a fresh checkpoint that includes an existing attestation. This act can compromise the finality guarantees of the chain.
When a validator is slashed for performing one of the previous inacceptable behaviours:
- A portion of their staked LYX or LYXt is burned, effectively made inaccessible.
- They are ejected from the active validator set and lose future reward potential.
- Their offense is publicly recorded, ensuring transparency and accountability.
Penalties
Penalties are leveled against validators who are offline or do not fulfill their commitment obligations without requiring evidence of malicious behavior. These are also known as inactivity punishments. Unlike slashing punishments, they are used to slowly reduce a validator's balance unless validators actively participate in consensus activities like block proposing or voting on attestations.
- Penalties increase the longer a validator is offline, reducing their balance.
- Multiple offline validators cause penalties to scale higher across the network.
- Indirectly, validators lose potential rewards while being inactive.
Inactivity penalties decrease as the effective balance of the validator decreases. During every epoch, rewards and penalties for each individual validator are determined using the validator's attestations, current block head, inclusion delays, and inactivity leaks.
Panelties rely on network-wide participation and values are determined in a network with a participation rate of 98%. If more than 33% of validators are offline and the network stops finalizing blocks, penalties will accelerate significantly.
| Downtime | 1 Day | 1 Week | 1 Month | 6 Months | 2 Years |
|---|---|---|---|---|---|
| Progressed Epoch | ~225 Epochs | ~1,575 Epochs | ~6,720 Epochs | ~40,320 Epochs | ~161,280 Epochs |
| Approximate Penalty | ~0.01875 LYX | ~0.13125 LYX | ~0.5625 LYX | ~3.375 LYX | ~13.70 LYX |
| Stake Loss Percentage | ~0.06% | ~0.41% | ~1.76% | ~10.55% | ~42.81% |
| Remaining Stake | ~31.981 LYX | ~31.869 LYX | ~31.438 LYX | ~28.625 LYX | ~18.30 LYX |
If the balance falls below 16 LYX or LYXt, the validator is automatically ejected from the active validator set of the network.
On LUKSO, it will approximately take 2 Years and 4 Months of downtime until the validator's stake will drop below 50%.
Termination
A validator may be forcefully exited from the active set under certain conditions, typically when:
- The balance drops below 50% due to slashing or penalties.
- It has been slashed for a serious offense.
Once ejected, the validator is immediately placed in an exit queue and gets subtracted from the overall number of validators. A validator is not eligible to receive any reward or participate in the consensus after it exits. To rejoin the validators' group, users have to restart the staking process.
A healthy validator should maintain a balance above 32 LYX or LYXt and ensure stable uptimes for good participation rates.