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How Does the Mechanism of “Slashing” Affect the Risk Profile of Staking?

Slashing is a PoS penalty that removes staked tokens for bad behavior, increasing the risk profile of staking.
Greeks.Live16.11.25

How Does the Mechanism of “Slashing” Affect the Risk Profile of Staking?

Slashing is a penalty mechanism in Proof-of-Stake (PoS) systems where a portion of a validator's staked tokens is forcibly removed (slashed) if they act maliciously or fail to meet protocol requirements (e.g. downtime). Slashing introduces a significant risk to staking, as investors can lose capital.

This risk must be factored into the required rate of return and DCF discount rate.

What Is “Slashing” in a Proof-of-Stake System?
What Is the Concept of “Slashing” in a Proof-of-Stake Consensus Mechanism?
What Is “Slashing” in a PoS System?
What Is the Difference between ‘Slashing’ and ‘Unstaking’ in DeFi?

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