Lido Finance, the Ethereum liquid staking platform, experienced 20 slashing events as a result of infrastructure and web3 signer configuration problems from validators operated by Launchnodes. These validators were offline, and the slashing incidents have been suspended while a thorough investigation into the root cause is underway. At present, the situation is stable, and the Launchnodes team worked diligently throughout the night to gradually restore the remaining validators’ infrastructure.
Validators that were slashed incurred penalties of up to 20.04 ETH (equivalent to approximately $31,000), which were expected to increase to 23.06 ETH by the time of withdrawal. Additionally, penalties related to infrastructure downtime and overall missed rewards (excluding execution layer rewards) amounted to 5.663 ETH, which includes the penalties for the slashed validators.
Lido reported that the platform’s stakers wouldn’t be affected by the situation, except for the reduced rewards during the upcoming rebase on October 12. Nevertheless, Launchnodes expressed a willingness to provide compensation. They distributed 25.663 ETH prior to today’s rebase, ensuring that stakers won’t experience reduced rewards for the day as a result of the outage and slashing.
Lido mentioned that they would utilize their Lido DAO insurance fund, consisting of 6,230 ETH (equivalent to $9.5 million), to reduce the consequences of the slashing events. However, this fund will not be triggered automatically, as they cannot ascertain the total amount of ETH involved in the slashing event.
There are only 226 validators (accounting for 0.04% of validators) that have been slashed in the Ethereum ecosystem since the Beacon chain launched on December 1st, 2020.
Slashing is the process by which validators are forcibly removed from a proof-of-stake network for failing to fulfill their validator responsibilities properly, such as prolonged downtime.