# Who Receives the Slashed Funds? ⎊ Path

**Published:** 2025-12-04
**Author:** Greeks.live
**Categories:** Path

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## Who Receives the Slashed Funds?

The destination of slashed funds varies depending on the specific Proof-of-Stake (PoS) protocol. In some networks, a portion of the slashed funds is burned, meaning it is permanently removed from the total supply.

This benefits all token holders by making the remaining tokens scarcer. In other protocols, a portion of the slashed funds may be given as a reward to the "whistleblower" validator who first reported the malicious behavior.

Often, it's a combination of both burning and rewarding the reporter, creating incentives for self-policing within the network.

- [How Do Different Blockchain Consensus Mechanisms (E.g. PoW Vs. PoS) Handle Transaction Fee Distribution?](https://learn.greeks.live/path/how-do-different-blockchain-consensus-mechanisms-e-g-pow-vs-pos-handle-transaction-fee-distribution/)

- [What Is ‘Slashing’ in a Proof-of-Stake System and What Is Its Financial Consequence for a Validator?](https://learn.greeks.live/path/what-is-slashing-in-a-proof-of-stake-system-and-what-is-its-financial-consequence-for-a-validator/)

- [How Do Delegated PoS (DPoS) Systems Address the 51% Attack Risk?](https://learn.greeks.live/path/how-do-delegated-pos-dpos-systems-address-the-51-attack-risk/)

- [Is It Possible for a Validator to Be Slashed Accidentally Due to Technical Issues?](https://learn.greeks.live/path/is-it-possible-for-a-validator-to-be-slashed-accidentally-due-to-technical-issues/)

- [Does Burning Guarantee a Net Deflationary State for Ethereum?](https://learn.greeks.live/path/does-burning-guarantee-a-net-deflationary-state-for-ethereum/)

- [Can a Burned Token Ever Be Recovered?](https://learn.greeks.live/path/can-a-burned-token-ever-be-recovered/)

- [What Happens to the Funds That Are Slashed from a Validator’s Stake?](https://learn.greeks.live/path/what-happens-to-the-funds-that-are-slashed-from-a-validators-stake/)

- [How Is a Second-Preimage Attack Different from a First-Preimage Attack?](https://learn.greeks.live/path/how-is-a-second-preimage-attack-different-from-a-first-preimage-attack/)

## Discover More

### [How Can an Underflow Be Exploited to Drain Funds from a Contract?](https://learn.greeks.live/path/how-can-an-underflow-be-exploited-to-drain-funds-from-a-contract/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Can an Underflow Be Exploited to Drain Funds from a Contract?](https://learn.greeks.live/wp-content/uploads/2025/10/Visualizing-Arbitrage-Equilibrium-Between-Layer-One-Blockchain-Volatility-And-Exotic-Option-Hedging-Strategies.webp)

By causing a zero balance to wrap to the maximum value, the attacker can pass a check and withdraw an unauthorized amount.

### [If a Validator Is "Slashed," What Options Trading Concept Is Analogous to the Loss?](https://learn.greeks.live/path/if-a-validator-is-slashed-what-options-trading-concept-is-analogous-to-the-loss/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![If a Validator Is "Slashed," What Options Trading Concept Is Analogous to the Loss?](https://learn.greeks.live/wp-content/uploads/2025/10/Layered-Digital-Asset-Structure-Illustrating-Collateral-Tranches-in-Decentralized-Finance-Options-Protocols.webp)

The loss is analogous to an option writer's loss when assigned a deep in-the-money option, exceeding initial reward.

### [In the Event of a Cryptocurrency Theft, How Does the Immutability of the Blockchain Both Help and Hinder the Recovery of Funds?](https://learn.greeks.live/path/in-the-event-of-a-cryptocurrency-theft-how-does-the-immutability-of-the-blockchain-both-help-and-hinder-the-recovery-of-funds/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![In the Event of a Cryptocurrency Theft, How Does the Immutability of the Blockchain Both Help and Hinder the Recovery of Funds?](https://learn.greeks.live/wp-content/uploads/2025/10/Quantum-Entanglement-Visualization-of-Intersecting-Collateralized-Debt-Positions-in-Decentralized-Finance.webp)

The blockchain's immutability provides a permanent record of a crypto theft but also makes it impossible to reverse the transaction and get your money back.

### [How Did the Ethereum Hard Fork Specifically Address the Funds Stolen from the DAO?](https://learn.greeks.live/path/how-did-the-ethereum-hard-fork-specifically-address-the-funds-stolen-from-the-dao/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Did the Ethereum Hard Fork Specifically Address the Funds Stolen from the DAO?](https://learn.greeks.live/wp-content/uploads/2025/10/Quantum-Entanglement-Calibration-of-Digital-Asset-Tokenization-Utilizing-Synthetic-Option-Strike-Price-Probes.webp)

A new contract was deployed to move the stolen Ether from The DAO's address to a withdrawal contract for the original holders.

### [What Is the Term for the Misappropriation of Client Funds by an Exchange?](https://learn.greeks.live/path/what-is-the-term-for-the-misappropriation-of-client-funds-by-an-exchange/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Term for the Misappropriation of Client Funds by an Exchange?](https://learn.greeks.live/wp-content/uploads/2025/10/Precision-Time-Decomposition-Analysis-of-Transparent-Analogue-Watch-Hands-Suggesting-Quantum-Entanglement-Hedging-Strategies.webp)

'Commingling' (mixing client and company funds) or 'embezzlement' (fraudulent appropriation of funds).

### [How Are Insurance Funds Typically Capitalized and Managed?](https://learn.greeks.live/path/how-are-insurance-funds-typically-capitalized-and-managed/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Are Insurance Funds Typically Capitalized and Managed?](https://learn.greeks.live/wp-content/uploads/2025/10/Layered-Dual-Tone-Compact-Containers-Reflecting-Volatility-and-Collateralized-Debt-Positions-in-DeFi.webp)

Capitalized by surpluses from liquidated positions and a portion of trading fees, managed by the exchange's risk team.

### [How Does the Concept of 'Key Derivation' Impact the Security of Funds?](https://learn.greeks.live/path/how-does-the-concept-of-key-derivation-impact-the-security-of-funds/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does the Concept of 'Key Derivation' Impact the Security of Funds?](https://learn.greeks.live/wp-content/uploads/2025/10/Abstract-Visualization-of-Digital-Asset-Custody-Module-Securing-On-Chain-Perpetual-Futures.webp)

Key derivation allows for single-secret backup but means the compromise of the seed phrase compromises all derived keys and funds.

### [What Is the Minimum and Maximum Amount of ETH That Can Be Slashed?](https://learn.greeks.live/path/what-is-the-minimum-and-maximum-amount-of-eth-that-can-be-slashed/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Minimum and Maximum Amount of ETH That Can Be Slashed?](https://learn.greeks.live/wp-content/uploads/2025/10/Bifurcated-Tokenized-Asset-Mechanism-Revealing-Underlying-Collateralized-Derivatives-Structure.webp)

Minimum slash is 0.25 ETH; maximum can be the full 32 ETH stake, scaled by the number of contemporaneous slashing events.

### [How Do Insurance Funds Support High Leverage in Cash-Settled Perpetuals?](https://learn.greeks.live/path/how-do-insurance-funds-support-high-leverage-in-cash-settled-perpetuals/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Do Insurance Funds Support High Leverage in Cash-Settled Perpetuals?](https://learn.greeks.live/wp-content/uploads/2025/10/Layered-Obscuration-of-Digital-Asset-Collateral-Structures-Simulating-Synthetic-Option-Payoffs.webp)

Insurance funds cover losses from liquidated positions that fail to cover their negative balance, preventing these losses from being passed on to profitable traders.

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