ETH2.0 Validator Rewards Slashing Cover
Since Ethereum deployed the Beacon Chain in 2020 as a precursor to the Ethereum Merge, the total amount of ETH deposited to the chain is currently standing at over 13.3 million, which represents 11.18% of Ethereum’s circulating supply. As Ethereum transitions from the Proof-of-Work to Proof-of-Stake consensus mechanism, this staked ETH is meant to power over 400,000 validators that will secure the Ethereum network. These validators earn ETH for their efforts at achieving consensus.
Ahead of this transition, UnoRe has been working to forge a viable partnership with validator operators to develop coverage that protects validators against staking risks associated with ETH2. As a result of our efforts, we have created a customized ETH2 Reward Slashing Cover for ETH stakers, a product tailored to provide validators with the greatest possible hedge against slashing events.
UnoRe will provide insurance to stakers in the event of ETH2 nodes facing slashing penalties, resulting in reduced yields for ETH stakers and lost ETH for delegators. Financial losses incurred by validators shall be compensated in $ETH within 10 working days after the end of the cover period (40 days).
The Reward Slashing Coverage will apply to the following on an epoch-by-epoch basis (~36 days):
- Missed rewards from being offline All deductions made on ETH2 Beacon Chain (including 0.1 ETH from whistleblower penalty)
- Transactional rewards as part of execution rewards missed as a result of being offline
- Penalties halfway to withdrawal date caused by unintended slashing
- Cases where loss is irrecoverable, irreversible, with no means of repayment or recovery by any parties in the future. Under this clause, the loss incurred must be related to the wallet address used to purchase the cover, and the loss must have been occurred during the cover period.
- The claim must be submitted during the cover period or within 7 days after the cover expires. Validators must have, at all times, at least 2 different ETH2 clients running simultaneously. These clients may be Lighthouse, Prysm, Teku, Nimbus etc.
- For every 1 ETH in cover purchased, UnoRe will insure up to 0.094 ETH in missed rewards per epoch, provided the criteria above are fulfilled. A deductible of 0.05 ETH will apply.
- Loss of covered assets is due to private key security breaches, malware, hacks, smart contract exploits, and/or software vulnerabilities.
- Claims will not be paid if 1000 or more nodes that are slashed within the cover period due to suspicions of colluding against the network.
- 10% or more of total active validator nodes across all public staking pools go down due to widespread network downtime.
- 10% or more of all validator nodes are not within the active validator set.
- Missed rewards are related to MEV (MEV, or Maximal Extractable Value, is the ability for node validators to take advantage of viewing memepool transactions which can lead to frontrunning)
- Missed rewards are due to technicalities right before, during, or right after the merge of the consensus and execution clients.
- The insured provides false information, lies or misleads with their claims.
- Any losses due to validator keys of staking pools are stolen, tampered with, hacked, or exploited.
- Nodes are misconfigured such as reward slashing caused by 1 key pair being shared by multiple validators.
- There is convincing evidence that slashing was caused by ulterior motives on validators’ part.
- Claims occur within 72 hours of the policy start date.
- Losses are caused by risks associated with Virtual Private Servers running ETH2 Clients.
- Losses are caused due to government intervention or regulations hindering the operation of validator nodes.