What is a Validator?
A validator is a semi-trusted entity responsible for validating and producing blocks. The Gitopia main chain relies on a set of validators to secure the network. The role of validators is to run a full-node and participate in consensus by broadcasting votes which contain cryptographic signatures signed by their private key. Validators commit new blocks in the blockchain and receive revenue in exchange for their work. By performing those tasks, they earn LORE tokens as a reward. In the case of block provisioning, the reward comes from the tokens newly minted on that block. Validators must also participate in governance by voting on proposals. Validators are weighted according to their total stake.
Validators can stake their LORE tokens (the native token on Gitopia) or be delegated tokens from other LORE holders. Validators will be able to charge delegators a commission in LORE token for their work in securing the network. In the case of misbehavior by the validator (for example, signing two different blocks at the same block height), part of the collateral deposited by them will get slashed.
What is Staking?
Staking is the process of locking up a digital asset (LORE in the case of Gitopia) to provide economic security for a public blockchain. Public blockchains are permissionless networks, meaning anyone is free to participate in maintaining them. As a result, it would be possible for some of the network maintainers (called validators) to act maliciously. To ensure that the maintainers behave in the network’s best interest, the locked-up assets are at risk of being partially slashed (destroyed) if there is evidence that a fault was committed.
Due to practical constraints of the software, the number of validators on Gitopia has to be capped. This restriction does not mean those LORE token holders who do not operate as validators themselves can't participate in securing the network. In fact, LORE tokens are designed to let each holder participate in securing the network using a mechanism called delegation. When LORE holders stake their LORE tokens, they must choose one or more validators to delegate to. The delegators are then eligible for receiving rewards but are also at risk of slashing, if the validators they choose, misbehave.
Who is a Delegator?
Delegators are LORE holders who cannot, or do not want to run validator operations themselves. Delegators help secure the Gitopia main chain by selecting one or more validators and delegating their voting power to them by putting up LORE tokens as collateral. In return, delegators can earn a proportion of the transaction fees as well as block rewards.
Validators never obtain custody of the LORE tokens delegated to them. Thus, there is no risk for delegators of their LORE tokens being stolen by validators.
Because they share revenue with their validators, delegators also share responsiblity. Should a validator misbehave, each of its delegators will be partially slashed in proportion to their stake. This is why delegators should perform due diligence on validator candidates before delegating, as well as spreading their stake over multiple validators. Delegators play a critical role in the system, as they are responsible for choosing validators. Being a delegator is not a passive role: Delegators should actively monitor the actions of their validators and participate in governance.
What is Slashing?
Slashing is an event, which results in a loss of stake percentage, depending on the type of network violation and jeopardizing the safety of other participants. Therefore, it represents not only a financial incentive to act properly but also is a measure to prevent nothing at stake problem.
Gitopia is a complex ecosystem where LORE tokens act not only as an economic incentive but also represent a governance unit playing a crucial role in ecosystem security. In that way, slashing becomes a tool that influences voting power distribution.
Besides, it affects the authority of caught fraudulent participants, motivates validators to improve their infrastructure, and in the case of delegators, to provide deeper due diligence and diversification amongst validators. Slashing also acts as a decentralization mechanism motivating re-delegate LORE tokens to more reliable or even smaller validators with equal security and infrastructure set up.
Which faults can lead to Slashing events?
If a validator misbehaves, their delegated stake will be partially slashed. There are currently two faults that can result in slashing of funds for a validator and their delegators:
- Double signing: Double signing can cause a double-spend or chain fork. The wrong setup of the validator’s infrastructure or key compromise are the most common occasions that cause this type of slashing. If someone reports on chain A that a validator signed two blocks at the same height on chain A and chain B, and if chain A and chain B share a common ancestor, then this validator will get slashed by 5% on chain A. The validator also loses the right to propose blocks and earn rewards without the ability to un-jail. All delegators of this validator enter the unbonding period, which lasts 21 days.
- Downtime: Downtime occurs when the validator is offline and does not participate in block commitment signing less than 5% of the blocks in a row of 10000. This situation leads to a loss of 0.01% stake not only for validators but also for bonded delegators. In addition, the validator drops out of the consensus and does not earn block rewards for at least 10 minutes. After fixing the issues, the validator can re-join the validators set by sending an un-jail transaction.
Slashing also affects LORE tokens, which were in the unbonding phase when one of these events happened.