Pier Two is proud to support Babylon as a Finality Provider and Validator.
BTC and BABY stakers should understand all risks relating to their delegated assets, including Babylon’s built-in slashing conditions.
Keep reading to understand the slashing risks within the Babylon ecosystem and how these risks are mitigated when staking with professional node operators.
Overview of Slashing in Babylon
Slashing is a protocol-enforced penalty for validator misbehaviour. It is intended to discourage actions that compromise network security or integrity. Babylon introduces slashing for both:
- Finality Providers: Those who stake BTC to provide time-stamping and finality to Babylon and other blockchains.
- Validators: Those who stake BABY tokens to help secure Babylon’s native proof-of-stake (PoS) chain and other Babylon Secured Networks (BSNs).
Slashing Conditions
1. Finality Providers — BTC Stake
- Slashing Condition: Equivocation (double signing). Equivocation in Babylon’s context means signing two conflicting messages for the same block height or epoch, which undermines consensus.
- Penalty: A fixed ratio, 0.1% of staked BTC.
- Impact:
- The slashed BTC is burned.
- The FP enters a "Slashed" state permanently — they cannot receive any further BTC rewards.
- Previously earned rewards are not clawed back.
- No Slashing For:
- Downtime
- Missed votes
- Any other behaviour apart from double-signing
2. Validators — BABY Stake (on Babylon Chain and other BSNs)
- Slashing Condition: Equivocation (double signing).
- Penalty: A fixed ratio, 5% of staked BABY tokens.
- Impact:
- BABY tokens are burned from the validator’s self-stake and/or delegators' stake proportionally.
- The validator remains jailed until manually unjailed.
- No Slashing For:
- Downtime
- Surround voting
- Any other faults not related to double-signing
Summary of Slashing Conditions
| Role | Asset Staked | Slash Penalty | Slashing Condition | Slashed Funds Burned? | Permanently Jailed? |
|---|---|---|---|---|---|
| Finality Provider | BTC | 0.1% | Equivocation | Yes | Yes (no more rewards) |
| Validator | BABY | 5% | Equivocation | Yes | No (can be unjailed) |
Slashing Risk Mitigation by Pier Two
Pier Two actively reduces slashing risks through the following practices:
- Secure Infrastructure: Pier Two is ISO/IEC 27001:2022 and SOC 2 Type I certified, and is actively working toward SOC 2 Type II and NORS certification. Read more here.
- Key Redundancy: Finality Provider and Validator keys are securely stored. Signing rights are tightly controlled.
- Single Instance Key Management: Validator keys are never active on more than one node simultaneously, eliminating common causes of double-signing.
- High Availability Infrastructure: Uptime is maintained through globally redundant infrastructure architecture, reducing pressure to make unsafe changes that could result in slashing.
- Monitoring and Alerting (24/7): Pier Two’s global team is monitoring its infrastructure 24/7 to catch anomalies before they escalate into slashing risks.
Final Thoughts
Babylon incorporates slashing as a protocol-level risk that cannot be entirely eliminated, penalising malicious actions (equivocation) while being lenient toward non-malicious faults (eg, downtime).
Ready to Stake?
Contact Pier Two today to learn how we can help you stake.
