Slashing

Slashing works as a protocol-level insurance policy for a Proof of Stake network: it treats each validator's staked balance as collateral that can be partially or fully confiscated the moment consensus rules are broken. Rather than relying on trust or reputation alone, the chain's software automatically detects the violation and burns or redistributes a slice of the offending stake, making dishonesty economically irrational at scale.

Two behaviors typically trigger it. Double-signing, also called equivocation, happens when a validator signs two conflicting blocks or votes for the same slot, an act that could otherwise be used to fork the chain or double-spend, so it draws the harshest penalties. Prolonged downtime is treated more leniently, since it usually reflects a technical failure rather than an attack, and often results in a smaller penalty or temporary removal ("jailing") from the active set instead of a full slash.

Implementations vary widely. Ethereum burns a small initial amount immediately, then applies a correlation penalty roughly two weeks into a 36-day exit process that grows if other validators are slashed around the same time, meaning coordinated failures cost far more than isolated ones. Cosmos-based chains typically slash a fixed 5% for double-signing and permanently "tombstone" the validator. Because delegated stake shares in the risk, anyone using staking services should check an operator's uptime history and slashing insurance before delegating, since losses are rarely reversible.