Proof of Stake - Is it risky to stake?

Question

• What if a client malfunctions due to the corruption of data isn't it risky to stake?

With PoW this is no issue but with PoS this seems to be a real issue with the slasher protocol. I would be worried to lose my funds.

I mean the risk to reward is for sure good, but I don't care if I would stake everything.

• Is this a valid concern?
• Is there a risk?

Answer 1

Slashed funds are the same as money wasted on energy used to mining on a fork and don't achieve becoming the largest (51% attack) .

You'll lose your founds if you behave badly as you lose Kw and CPU/GPU cycles (which traduces in money) while mining not correct blocks or on secondary chains/forks.

PoS carries some kind of bad behaviors (adopted by validators) to take care of ( which means attacks sometimes) like:

• Nothing at Stake: The Nothing-at-Stake issue is the event of a fork (the “fork” can be a malicious attempt to rewrite the history and do a double spend) the optimal strategy for any validator is to validate every chain so that the validator gets their reward no matter which fork wins. This means that consensus algorithm doesn’t work as intended.

The attacker may be able to send a transaction to an exchange for some digital commodity (usually another cryptocurrency), receive the commodity and then start a fork of the blockchain from one block behind the transaction and send the money to themselves instead.

Even with 1% of the total stake the attacker’s fork would win because everyone else is mining on both.

You can review the CasperFFG details here:

https://github.com/ethereum/casper/tree/master/casper/contracts

Vitalik said in order to solve that problems (by implementing slashing funds to bad behaving validators):

There is a proposal that we are very seriously considering, where a validator only loses their entire deposit if they are faulty around the same time that many other validators are faulty; if something happens to one single validator they would only lose a few percent of their deposit. This should make it safe enough to stake even without a multisig address.

It also has the nice side effect of adding an anti-centralization pressure, as there is an incentive not to stake with the same pool or on the same VPS platform or even with the same software as many other people, as each validator benefits from their failures, being uncorrelated with those of other validators.

But don't worry, as Vitalik said here, staking isn't that risky if you behave well (or you try it).

Read the full discussion on reddit: https://www.reddit.com/r/ethereum/comments/7mmsvt/i_just_read_casper_ffg_paper_and_have_a_question/

If you want to be even more sure that you are protected against slashes, you can implement multisig addresses for example, which make you as an individual more anonymous.

Hope it helps!