20 slashing occurrences have been recorded by the Ethereum staking protocol Lido Finance as a result of infrastructure and signer setup problems from validators run by Launchnodes. Around 3:30 PM UTC on October 11, the incident happened. Launchnodes’ validator nodes are currently unavailable, and while the fundamental cause is being looked into, slashings have stopped, according to Lido.
Lido calculated the impact of the slashing on the Ethereum blockchain to be about 20 ether (ETH), or $31,000. In addition, Lido factored in extra penalties while the validators are offline for troubleshooting and inactivity penalties that the validators will accrue. Validators will accrue inactivity fines while the validators are unavailable for troubleshooting. When a validator violates the proof-of-stake consensus rules of a blockchain, this is known as “slashing,” and it frequently leads to that validator’s removal or the loss of some of the staked Ethereum they put up as collateral.
Later, LaunchCode acknowledged that the infrastructure and signer configuration issues were the cause of the slashing events and that they were taking action to stop any more occurrences and restore full service. With the exception of a decrease in daily payouts that will be reflected in the subsequent rebase on October 12, Lido confirmed protocol stakes that they are unaffected.
The staking provider also verified that the Lido DAO has an insurance fund consisting of 6,230 staked ETH, valued at $9.5 million, which will be utilized to lessen the impact of the slashing but does not automatically activate. stETH investors will receive compensation after the “cover method” has been determined, according to Lido, who also stated that Launchnodes has agreed to cover all losses sustained by Lido.