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Concerns Arise as Lido Finance Faces Slashing Incidents

Concerns Arise as Lido Finance Faces Slashing Incidents

Lido Finance, an important Ethereum staking protocol, has recently shed light on a worrisome scenario: their protocol has experienced 20 slashing events. These events can be attributed to a combination of infrastructure issues and signer configuration problems related to validators operated by Launchnodes.

Disturbing Slashings at Lido

On October 11, around 5:30 pm, this unfortunate turn of events took place. Lido Finance quickly informed the community that the validators in question, operated by Launchnodes, had been deactivated. The immediate aftermath saw a slashing, and an active investigation began to identify the root cause.

For those less familiar with the term, slashing in the context of blockchain refers to a punitive measure applied when a validator violates the proof-of-stake consensus rules of the protocol. The consequence often involves the removal of the validator or a penalty by subtracting a portion of the staked Ether placed as collateral.

Lido Finance stated that the impact of this incident is projected to be around 20 ETH, equivalent to approximately $30,000. Additional penalties loom on the horizon as the validators remain inactive to solve the problem, combined with subsequent inactivity penalties that will accumulate over time.

A Glimpse into the Future

In further communications, Launchnodes identified the root of the slashing incidents as infrastructure malfunction and signer configuration issues. They stated, ‘Measures are being taken to limit further episodes and restore full service.’

For stakers using the Lido protocol, the consequences manifest in a decrease in daily rewards, which is expected to materialize during the next rebase scheduled for October 12. Additionally, Lido has in its arsenal an insurance fund stocked with 6,230 staked-ETH (valued at an impressive $9.5 million). This fund will play a crucial role in mitigating the financial shock of the slashing events, although it is noteworthy that the fund does not activate automatically. As a sign of hope, Launchnodes is committed to compensating Lido for any losses incurred.

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