Slashing Guide

In simple terms, "slashing" can be described as the penalty incurred on a validator and nominator for engaging in unethical behavior.

Slashing will result in validators and their nominators losing a percentage of their bonded/staked VNE, based on the "offense level," then the VNE is moved to the treasury. Details below.

• What Happens When Validators & Nominators are Slashed

• Offense Levels

• What Happens to Slashed VNE

What Happens When Validators & Nominators are Slashed

Validators or Nominators can be "slashed" (i.e. penalized) for certain infractions, such as double-signing or not being online when needed. It involves a reduction in the percentage Stake of the validator or nominator as a penalty for their infraction. This serves as an incentive for validators and nominators to act in the best interests of the network, as they can lose their stake if they do not.

When a validator is found guilty of a misconduct, they (and the nominator concerned) lose a fixed percentage of their stake (and NOT a fixed amount of VNEs). This means that validator slots with more stakes will be slashed more VNEs. This is done to encourage nominators to gradually shift their support to less popular validators.

Validators with a larger stake will be slashed more severely than less popular ones. This is done so that nominator can shift their nominations to less popular validators.

There are different offense levels that determine the severity of the penalty.

Offense Levels

The following levels of offense are included under slashing. They are meant as guidelines for different levels of severity for offenses. To understand the severity of the offense, below mentioned levels and the penalty incurred is given:

• Level 1 Isolated unresponsiveness, i.e. being offline for an entire session. Generally no slashing, only chilling.

• Level 2 Concurrent unresponsiveness or isolated equivocation, slashes a very small amount of the stake and chills.

• Level 3 Misconducts unlikely to be accidental, but which do not harm the network's security to any large extent. Examples include concurrent equivocation or isolated cases of unjustified voting in GRANDPA. Slashes a moderately small amount of the stake and chills.

• Level 4 Misconduct that poses serious security or monetary risk to the system, or mass collusion. Slashes all or most of the stake behind the validator and chills.

What Happens to Slashed VNE?

Slashed VNE is added to the Treasury.

The reason behind this (rather than burning or distributing them as rewards) is that slashes may then be reverted by the Council by simply paying out from the Treasury, which is useful the case of faulty slashes. In the case of legitimate slashing, this action moves tokens away from malicious validators to those building the ecosystem benevolently.