Around 75 Eth 2.0 validators got “slashed” this week because of an “upgrade gone wrong’ by Staked, a staking infrastructure firm.
Staked CEO and co-founder Tim Ogilvie gave his word that since the slashing happened because of his company’s technical issue, all the affected parties will be reimbursed by them. As for Staked, they will have to pay a slashing penalty of 18 ETH (~$30,000).
What Is Slashing?
One of the most significant changes that Ethereum will be going through during its upgrade to ETH 2.0 is the shift from proof-of-work (PoW) to proof-of-stake (PoS). Ethereum will be implementing PoS using the Casper protocol. As per Casper, any validator (aka users who take care of consensus in the PoS system) found not following the network rules gets punished by having a portion of their Ethereum stake slashed. Staked implemented this system to keep the Ethereum network as efficient and honest as possible.
What Went Wrong?
As per Staked, they were trying to improve their validator performance metrics by increasing their signing rates. The idea was to enable their validators to produce more blocks and earn more staking rewards. However, they erroneously introduced a bug into the system that disabled Prysm’s on-client slashing protection database. Regarding this mistake, Staked said:
"Obviously, we should not have disabled the persistence of Prysm's database in pursuit of better performance. The performance gains we achieved weren't worth the additional risk we inadvertently added."
After learning an “expensive lesson,” Staked said it has introduced changes to how it deploys new nodes to avoid this mistake from happening again. In this new system, nodes can’t participate with validators until they are fully synced.
Who Are Staked?
Staked is one of the largest Eth 2.0 validators with a 9% staked in ETH 2.0’s total stake, which is worth $245 million. Its multi-tier signing and listening node architecture aim to deliver stakeholders a combination of security, scalability, and decentralization. The team behind Staed has a successful track record of starting, building, and operating web services at IAC/InterActiveCorp, Vimeo, AdBuyer/MediaOcean, PlanetTran, Flavors.me, Haystagg, and Think Gaming (YC 2014).
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.