Lido Finance Faces Penalties Following Shapella Upgrade
After the Shapella upgrade was deployed, a minor issue led to validators within the Lido Finance system being penalized. However, the cause was quickly identified and addressed.
On the evening of April 13th, Lido Finance’s Twitter account reported discovering issues with the node software. Specifically:
There are 11 slashing ongoing with the RockLogic GmbH node operator in Lido. Lido DAO contributors and RockLogic are investigating.
— Lido (@LidoFinance) April 13, 2023
Currently, the total projected impact is around 20 ETH, or about 3% of average daily protocol rewards/0.0004% of TVL.
“11 slashing incidents have occurred involving Lido's node operator RockLogic GmbH. The Lido and RockLogic teams are investigating the cause. The estimated total damage is around 20 ETH, which constitutes 3% of the protocol’s daily rewards and 0.0004% of the Total Value Locked (TVL).”
(Note: Slashing is a process in Proof-of-Stake networks that penalizes and confiscates assets from validator entities that engage in malicious behavior, violate validation principles, or endanger the network.)
The cause has been identified. At this time, the situation is stable, and validation proceeds normally for the rest of RockLogic GmbH validators. https://t.co/1lA6DZk9rM
— Lido (@LidoFinance) April 13, 2023
The Lido team quickly identified the problem and issued statements to reassure users.
According to project updates, the total slashed amount is approximately 11.19 ETH and is expected to increase to 12.09 ETH as the affected validator exits the staking network. The total reward loss is about 0.31 ETH, expected to rise to 1.75 ETH. Therefore, the combined damage from slashing and reward loss totals 13.84 ETH.
Lido Finance also stated that the project always maintains a reserve fund equivalent to 6,000 stETH to cover slashing incidents. Additionally, the project assured that if any human errors were involved, RockLogic GmbH would bear the associated costs.
