April 19, 2024
Lido Finance Faces Minimum Fine of 20 ETH Before Withdrawal from Slashed Validators
Altcoins News

Lido Finance Faces Minimum Fine of 20 ETH Before Withdrawal from Slashed Validators

Before it can withdraw its ETH from the cut validators, Lido Finance, the top liquid staking protocol, must pay a minimum fine of 20 Ethereum.

The highest number of validators to be removed from the Ethereum network in a single day this year occurred on Wednesday, when 20 validators connected to Launchnodes, one of Lido’s node operators, were removed.

According to a Lido update, the protocol will initially lose about 20 ETH, with “additional penalties” for inactivity before leaving the network.

Slashing is the act of forcefully removing validators from a proof-of-stake network for failing to carry out their validator duties adequately, such as by experiencing lengthy unavailability.

Additionally, a slicing penalty of 1/32 ETH, up to a maximum of 1 ETH, is applied, and each slashed validator is instantly burned. Additional fines may be imposed after it.

According to Ethereum.org, these fines are applied over the next 36 days before the validator may withdraw their staked money. A validator departure is now only feasible after November 17.

According to a notification from Launchnodes, the incident was caused by “infrastructure and web3 signer configuration issues.”

“Steps are being taken to prevent any further occurrences and restore full service,” the infrastructure provider company stated.

The loss in penalties to each validator during the most recent significant slashing event, when 12 validators were simultaneously sliced on August 26, was less than 1.10 ETH.

The Lido team also stated that in reaction to similar occurrences, the protocol has established a reserve “cover fund of approximately 6,200 ETH to help mitigate the slashing impact.”

The team is awaiting information on the losses’ scope, which it said cannot be known “ahead of time.”

Later, the public will vote on whether or not the “Lido DAO cover fund should compensate affected holders.”

Image: Wallpapers.com

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