What is Slashing?
Slashing is a mechanism built into blockchain protocols to discourage validator misbehavior, designed by protocol creators to incentivize security, availability, and blockchain participation. While the specifics are defined within each protocol, the slashing mechanism is similar: a predefined percentage of the validator’s tokens are lost when it behaves abnormally on the protocol.
Most protocols have two conditions that trigger slashing: validator downtime and double-signing. Downtime and double-signing are counterbalanced considerations that we take very seriously. Typically, downtime results in a very small penalty (for example, 0.1% of tokens) whereas double-signing can incur a much higher penalty (for example, 5% of tokens).
How Bison Trails Works to Minimize Slashing
Staking providers across the board do not cover slashing losses. Bison Trails works to reduce the chances of slashing by prioritizing double-signing prevention over downtime, since the penalty for double-signing is higher. We do this by ensuring that two signing nodes are not online simultaneously for any given customer’s cluster.
Infrastructure providers that prioritize downtime mitigation above all else — to avoid missing participatory rewards and to avoid downtime slashing — can be too aggressive. Bringing backup validators online when primary validators experience temporary issues introduces the risk of double-signing. As an example of this, both Cosmos and Terra suffered their own slashing incidents when validators double-signed blocks.
Our platform only allows one signing node in a cluster to be online at any given time. As a result, our highly-available infrastructure solution provides signing nodes that are ready and waiting to be used, but not able to begin signing blocks until our block-signing monitor signals that it is safe to do so.
In the rare event of a cloud provider or regional signing infrastructure outage, Bison Trails verifies that the primary validator cannot come back online before the signing node is moved to an available region. We use an intervention system with block signing lock software to prevent human error. Compared to a manual process, event response on the Bison Trails platform dramatically minimizes downtime and the risk of slashing for our customers.
We are in the process of implementing additional protections to enhance our service and further reduce the likelihood of a critical event. In short, slashing is always a risk when participating on Proof of Stake networks — we do our best to ensure it never impacts our customers.