The Staked Blog

How Does Staked Avoid Slashing Risk?

Posted by Staked on Mar 6, 2020 12:08:17 PM

Staked spends a ton of time and money ensuring that our delegators will never get slashed. Our two-year track record with no slashing events across 18 networks is a good testament, as is our 100% uptime SLA. This blog post goes deeper on the tech that backs up those claims.

What are the Slashing Risks?

We worry about two risks in staking:

  1. Extended downtime
  2. Double-signing blocks

Short-periods of downtime are usually ok but extended downtime can result in (small) slashing penalties. Double-signing a block means producing two blocks at the same block height. This can look like an attack on the network and can be punished heavily. For example, if a validator double-signs in Cosmos, for example, delegators are slashed by 5% of their stake and the validator is permanently removed.

Staked’s Multi-Cloud Environment

Staked runs across multiple cloud environments. We’re currently running across AWS, Google Cloud, IBM Cloud and Digital Ocean. We use a highly available Kubernetes cluster to monitor the health of those environments and deploy containers with node software in response to network conditions.

What happens if an AWS data center goes down? Kubernetes deploys new nodes into a new data center (e.g. Google Cloud) and we’re back up and running. This is the same way we handle nodes that crash, have an underlying hardware issue, etc. We automatically react to most problems without any human intervention.

Preventing Double-Signing Across Environments

But there’s a catch! A network connectivity issue might look like a data center outage. We can’t communicate with the data center, so we re-deploy into another environment and start producing blocks. But the original nodes can’t be shut down. There’s now a risk that zombie nodes can return. If those zombie nodes start producing blocks, it creates a risk of double-signing.

Staked uses Hashicorp’s Consul to eliminate this risk. Using Consul, we create a MutEx lock that ensures only one node can produce blocks at any time. If we detect issues with our running nodes, Consul re-assigns the ability to sign blocks to our new nodes and blocks any zombies.

We take delegator’s trust very seriously and continue to invest in technology that reduces slashing risk on behalf of our partners. If you’re evaluating a staking partner, make sure you understand how they mitigate these risks.

Key security is the other major piece of the puzzle here. We’ll follow-up with a second post on how we handle signing keys.

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About Staked

Staked helps investors reliably and securely compound their crypto by 5% — 100% annually through staking and lending. Staked runs validation nodes for proof-of-stake currencies and offers access to on- and off-chain lending options that provide an annualized yield of in-kind currency. Staked’s investors include Pantera Capital, Digital Currency Group, ParaFi Capital, Coinbase Ventures, Winklevoss Capital, Fabric Ventures, Global Brain, and other leading crypto investors.

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