Comparing Slashing Penalties on Proof-of-Stake Networks by Eric Alston | Devcon SEA

[Music] um diving right in because boy do I have a constraint I mean those of you who know me know some of my thoughts last longer than five minutes let alone articulating them so this is comparing slashing penalties on stake blockchain networks an EF funded uh project with uh Bill Lair of Massachusetts Institute of Technology as well as uh my ra Bryce Boogie at CU Boulder but um to me automated penalties in a comparative institutional context are quite interesting because they're pretty uncommon in private coordinative contexts generally you see the threat of discretionary termination as a hanging penalty to which most employees are subject to In traditional employment context rewards though are also discretionary in those contexts other than the wages or salary that have been contracted for you know there's endof year bonuses things like that but blockchain is meant to eliminate a centralized discretionary intermediary such that this makes the actual Exon specification of automated rewards and penalties more important for aligning incentives in the joint productive context that blockchain networks are coordinating in furtherance to so to me you see simple rewards for narrowly scoped joint production such as the Bitcoin network but our perspective on these things is there for more complex joint coordinative purposes such as what the ethereum network is assembled in furtherance of a turing complete system it we think actually you need both rewards and penalties to have more complete incentive alignment so this is our economic organizational Logic for the emergence of slashing penalties and to a comparative institutional scholar like me somebody who worked for the comparative constitutions project tabulating at a very very fine grained level you know many many details about constitutions around the world that was kind of the inspiration for this project which was before you can even begin to make uh inferences about outcomes on different you know constitutional contexts or blockchain networks you need to have a fairly fine grain tabulation of the existing institutional choices and so to a scholar that does this kind of thing it's like wow looking out at the panoply of stake networks it's like you know my bread and butter let's let's analyze what's going on and so a very initial kind of a takeaway is this is our typology of both penalty conditions predominantly conflicting actions double signing double attestation omitting transactions those tend to be potentially signals of malicious intent not certainly because most of the time they're honest errors and we view the intent of these networks is to drive the probability of success of a malicious action down to zero but the problem is given sumity given the automated context you can't infer you can't distinguish between honest errors and malicious intent so you got to punish both non-participation downtime also results in much more minor penalties but it's quite common as well what do the economic penalties look like either a percentage of stake a fixed penalty as well as the forone rewards from being offline either temporarily or permanently place like networks like ethereum also have enhanced penalties as a function during a specific time period in which other you know validators might be performing potentially malicious actions as well because of the higher likelihood that that could be collusive validator removal is either permanent or temporary and then there's also the possibility that you're foregoing governance penalty application can be automatic additional as well as in a few limited cases including the Q Network discretionary in certain ways these are our summary summary statistics you know 46 of the 69 stake blockchain networks in the top 100 by market cap have penalty regimes and these range from in economic magnitude at current prices today between a162 to $375,000 for double signing as well as less than a single penny up to 36k for downtime eight of 46 penalty regime networks have the orig have an original code base the majority are I either just based on evm or Cosmos SDK withdrawal cues range from instantaneous to 28 days with a rough average among 54 stake networks of 11.5 days of waiting temporary removal from the validator set is more common than permanent removal perhaps due to the inability to bar from re-entry with a different network identity due to the sumity of these contexts in the first place offline penalties range from foregone rewards to a small fraction of pledge stake we think this variance reflects these four mechanisms and ultimately in my final moments you might say why should ethereum care what's going on in these other contexts and we think one etherium strength is their ability to adapt it's shown the willingness to choose from available design choices in the perspective of wanting to improve furthermore we also think in context where increasingly seeing AI agents having both you know rewards and penalties to align the incentives of AI agents is actually going to be incredibly important such that we think the Lessons Learned on these stake networks are likely important in that context as well thank you very much holy smokes well uh that was extremely impressive uh if you're uninitiated uh Eric has removed all full stops from that presentation uh that was that was fast that was amazing really really well done thank you very much so I don't think we actually have any questions so I'd say given the fact that it seemed like you were covering everything very quickly is there any sort of one key takeway that you'd like us to so just just to go back to this point is what does the