Slashing

Slashing is a cryptoeconomic incentive mechanism that penalizes nodes who misbehave in some way by confiscating some of their staked cryptoassets. Although slashing can be used in a variety of blockchain-based systems, it is most commonly used in Proof of Stake (PoS) systems to punish nodes and hold them accountable for voting 'incorrectly' or undergoing downtime.

The purpose of slashing is to encourage maximal honest network participation and, thus, security. By punishing network downtime, slashing incentivizes delegators and node operators to seek out and invest in best practices. Slashing also imposes costs to potential network attackers; these costs are intended to be significant enough to make malicious attempts such as a 51% attack or double spending prohibitively expensive.

'Slashed', or penalized funds may undergo various treatments depending on the network; typically, funds are distributed to honest nodes or nodes who reported the misbehavior, or the assets can be burnt.