Staked Blamed for Technical Issues

Yesterday, Staked, an American crypto staking infrastructure provider, announced that several of its validators had been penalized after it was found guilty of violating network safety protocols.

The company explained in a statement that it had introduced competing blocks to the Ethereum blockchain. However, a technical malfunction caused sporadic security issues, and it was held accountable.

Staked revealed that it suffered an unanticipated reaction to configuration changes. The reactions caused several of its nodes to restart after an error, leading to them incorrectly signing the second version of a previously-signed block.

Statistics on Beacon Chain reported that the issue had caused Ethereum 2.0's largest single validator slashing event since the Beacon Chain went live in December 2020.

Validator slacking is a feature in the Proof of Stake blockchain that is used to discourage deleterious validator behavior. It”s implemented in the event of double-signing and downtime. While the specifics are usually defined within each protocol, the mechanism is typically similar, a pre-set percentage of a validator's token is lost when it doesn't behave as it should.

As part of the punishment, Staked confirmed that 75 of its validators were slashed, and it would have to pay 18 ETH ($29,826 at press time) in fines.

Considering that Staked is the node administrator, the company was penalized eventually. The infrastructure provider explained that it had made some mistakes while pursuing “technical performance over double-signing robustness.” sadly, it lost that trade-off. The company said in part:

“We attempted to scale up the number of beacon nodes to get better performance […] The performance gains we achieved weren't worth the additional risk we inadvertently added.”

Ethereum's quick action is understandable. The blockchain giant has been touting its Ethereum 2.0 upgrade for a long time as a possible solution to its many challenges. Having a network participant that tries to hamper its operation could be problematic for everyone.

Things are even direr for Ethereum 2.0 now, as the beacon focuses on it. Earlier this week, price gains in Ether pushed Ethereum 2.0 to become the third-largest network by staked capitalization. It has slipped back into the fourth position again, with Avalanche proving to be significant competition. However, with less than $100 million in staked value separating the two assets and Ether riding a significant high, the latter could easily climb back into the third position and solidify its place.

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