Ethereum Staking Protocol Lido Finance Discloses 20 Slashing Events
Lido Finance, an Ethereum staking protocol, has revealed that its protocol experienced 20 slashing events. These events were caused by infrastructure and signer configuration issues from validators operated by Launchnodes. The incident took place on October 11 and led to the offline status of Launchnodes’ validators nodes. Lido Finance stated that the slashing resulted in a loss of around 20 Ether (ETH), equivalent to $31,000, as well as additional penalties while the validators are offline for troubleshooting.
Details of the Slashing Events
Slashing refers to a process where a validator violates a blockchain’s proof-of-stake consensus rules, which can lead to their removal or a reduction in the staked-Ether they provided as collateral. Launchnodes attributed the slashing events to an infrastructure and signer configuration issue and assured that investigations were ongoing to prevent any further occurrences.
Impact on Stakers and Compensation Plans
Lido Finance clarified that stakers on the protocol are not directly affected, except for a decrease in daily rewards. The protocol also mentioned that it has an insurance fund worth $9.5 million, which will be utilized to mitigate the slashing impact. However, the compensation process will not be triggered automatically but will depend on the “cover method” determined by Lido Finance and Launchnodes’ reimbursement commitment.
Lido Finance as the Largest Liquid Staking Protocol
Lido Finance is currently the largest liquid staking protocol with $13.8 billion in total value locked on its platform, according to DefiLlama. The second largest is Rocket Pool with $1.7 billion locked. It is worth noting that since December 2020, only 226 validators in the Ethereum ecosystem have been slashed, accounting for just 0.04% of all validators.
Hot Take: Ensuring the Security of Staking Protocols
The recent slashing events experienced by Lido Finance highlight the importance of maintaining robust infrastructure and signer configurations in staking protocols. It is crucial for protocol operators to conduct regular audits and implement necessary security measures to prevent such incidents. Additionally, the collaboration between Lido Finance and Launchnodes to investigate the root cause and provide compensation demonstrates the commitment to ensuring the security and trustworthiness of the protocol. As the popularity of staking grows, it becomes increasingly vital to prioritize security and protect users’ assets.
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