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Validator configuration issues lead to disclosure of 20 slashing events by Lido Finance

Validator configuration issues lead to disclosure of 20 slashing events by Lido Finance

The initial impact of the slashing events on Lido Finance’s Ethereum staking protocol amounted to 20 Ether, worth $31,000. The validator operated by Launchnodes, which was involved in the slashing events, has been taken offline. The incident occurred on October 11 and Lido Finance has disclosed that there were a total of 20 slashing events due to infrastructure and signer configuration issues from Launchnodes’ validators. The root cause of the issue is currently being investigated.

Slashing is a process where a validator breaches a blockchain’s proof-of-stake consensus rules, resulting in the removal of the validator or slashing a portion of the staked ETH they provided as collateral. Launchnodes stated that the slashing events were caused by an infrastructure and signer configuration issue and they are taking steps to prevent further occurrences and restore full service.

Stakers on the Lido protocol are not directly affected by the slashing events, except for a reduction in daily rewards that will be reflected in the next rebase on October 12. Lido DAO has an insurance fund of 6,230 Staked ETH (stETH), worth $9.5 million, which will be used to mitigate the slashing impact. However, the insurance fund does not trigger automatically and compensation for stETH holders will be provided once the “cover method” has been decided. Launchnodes has pledged to reimburse all losses incurred by Lido.

Lido Finance is the largest liquid staking protocol with $13.8 billion in total value locked in its protocol. Only 226 validators (0.04% of all validators) in the Ethereum ecosystem have been slashed since the launch of the Beacon Chain in December 2020.

Summary:

– Lido Finance’s Ethereum staking protocol experienced 20 slashing events due to infrastructure and signer configuration issues from Launchnodes’ validators.

– The initial impact was 20 Ether, worth $31,000.

– The validator involved has been taken offline and the root cause is being investigated.

– Stakers on the Lido protocol are not directly affected, but there will be a reduction in daily rewards.

– Lido DAO has an insurance fund of 6,230 stETH, worth $9.5 million, to mitigate the slashing impact.

– Compensation for stETH holders will be provided once the “cover method” is decided.

– Launchnodes has pledged to reimburse all losses incurred by Lido.

– Lido Finance is the largest liquid staking protocol with $13.8 billion in total value locked.

– Only 226 validators have been slashed since the launch of the Beacon Chain in December 2020.

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