Deliberate Slashing: Don't slashing and leaking incentivize DDOS attacks on smaller nodes? Won't this centralize POS more than POW, even?

Question

In Ethereum's proposed proof-of-stake algorithm (POS):

1. A traditional node operator can't host a node themselves (e.g. on a home network), someone could just DDOS their node to bring them offline. This is only a problem in slashing (not POW) because it leads to a loss of funds (see later comment on this). So, a large percentage of nodes will likely be hosted on one of 3-5 cloud service providers. [These are the nodes needed for safe decentralization.]

2. Who would have the incentive to DDOS other nodes? Those with network resources, perhaps only those with the resources to have non-traditional DDOS protections on hardware outside these 3-5 cloud service providers. [These are multiple nodes controlled by one entity, like how Bitmain operates]

Are financial incentives everything? If yes, then this is a very real attack vector.

The owner of more resourceful nodes in #2 can just DDOS the ports of nodes hosted on one of these cloud service providers in #1. When network nodes drop offline for a time period, each node loses ~X% of their shares. It might be that the attacks are slow, such that only 0.5% of the network nodes are DDOSed offline per month. One prolonged DDOS attack could be enough to wipe out a node operator's yearly POS profits, and stop each of these operators from wanting to go back online. Over time, the coins of #2 become more valuable, and as more operators in #1 decide not to stake, so do #2's returns in proof-of-stake. So, the conclusion is that there is really a tremendous incentive for those with resources (#2) to DDOS nodes that actually decentralize the network (#1). I call this attack vector deliberate slashing.

In proof-of-work, the financial cost of custom ASICs is actually quite high. On the contrary, a DDOS attack on a POS node (deliberate slash) is cheap. Any POS algo with slashing included is at risk.

The part about nodes being incentivized to run on a cloud service provider is also significant. It substantially increases the insider threat risk for something to go wrong versus running on your own hardware. Because the risk of a deliberate slash doesn't require access to the OS, there are probably nuanced ways to affect a large number of nodes in this manner that may not exactly be considered a "DDOS attack". More concretely, it requires paying for markups on bandwidth costs that may not be there if you could safely run a POS node from home, giving those in #2 even more power.

Is it possible to answer this question without "Whataboutism"? Let's not get tribal and compare this only to other coins / consensus algorithms. Please stick to the engineering problem outlined here. The POS component of consensus is actually more centralized than the POW component because deliberate slashing is a much cheaper attack vector than building an ASIC -- but theoretically, just being more decentralized than POW wouldn't be enough anyway. If Ethereum switched to a POS algorithm without slashing, all these concerns wouldn't be valid.

I am not an expert in cryptocurrency or network stuff. But based on what little I know about peer-to-peer networks, this has to be something that was considered by the Ethereum powers-that-be. I.e., Joe Lubin's Infura and Etherscan.io. Is there a mechanism to prevent deliberate slashing?

EDIT: These concerns were actually brought up 12 months ago as well: https://www.reddit.com/r/ethereum/comments/7nkwzn/what_is_the_punishment_for_a_validator_node_being/ds36kei

Also, see this post regarding how offline nodes (like those that have been DDOS'd) may generate Uncles leading to a slashing condition: Casper slashes nodes with poor network connection? and also:

What are the impacts of the Ethereum pre-sale, pyramidal wealth distribution, and mysterious lack of concern within a decentralized financial system?

How much control does Consensys have over Ethereum, and how does this affect Ethereum's decentralization?

Answer 1

This isn't a great question for Stack Exchange because you've buried a bunch of separate questions in the premises. Reddit would probably be better. But here goes.

The penalty for being offline for a short period of time is quite low, and it won't necessarily be trivial to identify which nodes you need to DDoS, so it isn't obviously correct to say that you won't be able to host a node on a home network for fear of DDoS.

Additionally, the penalty for being offline at the same time as a lot of other validators is substantially higher, so there's a disincentive to host on shared cloud infrastructure that a lot of other validators are likely to be hosting on, or indeed on hardware controlled by the same systems and administrators.

Because the penalty for being offline for a short period of time is low, the claim that there's a centralization incentive which doesn't exist with either PoW is probably not true. For instance, with conventional PoW, because you have fairly low profit margins and your revenue has to cover serious capital costs, even a small amount of downtime will turn your profits into losses. The claim may be true in comparison with some other PoS systems, depending on the system, but you'd have to look at the details of the alternative system.

PS On terminology, I'm not sure that what you're talking about is always referred to as "slashing"; Some people seem to use "slashing" to refer to the penalty for sending deliberately contradictory messages, which a correctly-functioning node can't do by accident. The penalties for this are much greater than the penalties for being offline.