General
Slashing is a punitive action on Proof-of-Stake (PoS) blockchains designed to maintain network security and integrity. By imposing penalties on misbehaving validators, slashing ensures they have a strong financial incentive to act in the network's best interest.
It’s important to understand, however, that slashing may be caused by deliberate and accidental violations. Since the system acts automatically and is, therefore, impartial, it cannot care about the reasons behind the offense; the network’s best interests are at the heart of this mechanism. To that end, not all validators that had been slashed are inherently “dishonest,” as some sources tend to refer to them.
Also DAIC has never the intention to act by purpose in a dishonest way, which would cause a punitive slashing action, which would also have an impact on its Delegators.
DAIC is therefore committed to ensuring high validator uptime for our delegators. In order to minimize the slashing risks, DAIC works in four general directions, as listed below.
- Having a dedicated DevOps team
- Implementing continuous monitoring solutions
- Developing a set of best practices
- Having risk containment measures in place
Downtime Slashing
To uphold the above-mentioned commitment, we are proud to offer validator downtime slashing protection to our delegators and a therefore especially dedicated DAIC slashing insurance fund. This protection applies in the event of downtime slashing, which occurs when the validator fails to provide the required number of block signatures specified by the blockchain's on-chain parameters, resulting in a slashable event. The refund amount will be determined by multiplying the delegator's stake by the slashing fraction imposed by the blockchain and to the extent possible covered by the DAIC insurance fund.
The DAIC insurance fund
DAIC will provide insurance protection for delegators. The DAIC insurance fund will be pre-funded according to the current slashing risk DAIC bears and will be deposited on a COSMOS/NOBLE wallet (noble1rkt5tcwy8tqc24tekmqvuuphh75xymhe65warh) in a stable currency (USDC, USDT or DAI). The corresponding amount might be placed in a DeFi product in order to increase its value over time and to cover as much capital as possible. The current value of the insurance can be checked here: Insurance wallet
DAIC will continuously (and at least once a month) evaluate if the amount on the insurance wallet is of an appropriate size to cover the existing slashing risks and will increase or decrease the coverage accordingly.
Up to 80 % of the Insurance wallet will be used to return the funds lost in the event of a slash incident to DAIC’s delegators, which can be returned either in stable currencies or in the affected validator’s currency. DAIC will be solely responsible for making the final decision.
Eligible validators
- This program concerns DAIC validators having a fee equal to or greater than 1 % and who have been operating with a fee equal to or greater than 1% for at least 30 days before the slash incident to be covered occurred.
- This program shall not apply to validators who have their own slash insurance.
- This program shall not apply to validators with unlisted nor unmarketable currencies.
Eligible delegators
- This program will cover delegators whose losses are valued at more than $10. To calculate the losses due to the slash incident, DAIC will take the dollar value of the validator's currency on the day the slash occurs, taking as value the one indicated on Coingecko.
Affected balance
- The affected balance is the balance that has been deducted from the delegator’s account due to the slash incident, as long as it exceeds the amount of $10.
Enforcement procedure
Once a slash incident has been detected in a DAIC validator and meets the criteria to be accepted under DAIC's Staking Insurance fund, DAIC will prepare the refund details for each affected account, publishing this information and the means of refund within a maximum period of 30 calendar days. This communication will be sent through DAIC's official media: Twitter and Telegram or via personal messages.
In the event that the refund is made in the same currency affected, any user who wishes to validate or claim any discrepancy found in the list presented by DAIC will have a period of 5 days from the publication of the announcement. In the event that the refund is made in a stable currency, users will have a period of 15 days to follow the procedure that DAIC will announce, where the account in which they wish to receive the refund will be provided and where they can validate or claim any discrepancy with respect to the list presented by DAIC.
At the end of the period for claims and rectification, no claims or modifications will be accepted and the refund will be made at the end of the slash incident.
All deadlines described here may be extended by official communication if necessary to ensure a fair and transparent process.
The following exemptions apply
No slashing protection or insurance fund protection coverage:
- Widespread slash incidents where more than 25% of the network has been affected, this 25% being calculated by total stake or by number of validators; in either case, it is not covered by DAIC's insurance guarantee.
- Slash incidents not caused by DAIC errors, but in code development by the official validator software development teams.
- Slash incidents caused by lack of network’s consensus as a result of sybil-type network attacks.
Further exemptions
Blockchains:
- None
Delegator Types:
- Foundation delegation wallets
- Blockchain delegation program wallets
This policy does not automatically cover other types of slashing, including but not limited to:
- Double sign (tombstone)
- Oracle vote misses
- Bridge orchestrator vote misses
Though DAIC had such low slashing events, that it also - on a case by case basis and voluntarily covered also these events in the past with its slashing insurance fund.
Also read our Terms & Conditions & Privacy Policy.
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