Chainproof Shields Ethereum Stakers From Slashing—Guarantees Fixed Yields Despite Crypto’s Volatility
Ethereum validators just got an insurance policy against their worst nightmare: accidental slashing penalties that vaporize staked ETH. Chainproof’s new product locks in annual yields—no matter how badly nodes misbehave.
How it works: The protocol acts as a financial airbag, absorbing slashing losses while passing guaranteed returns to risk-averse stakers. Validators pay premiums; investors sleep soundly.
The catch? Like all crypto ’guarantees,’ it’s backed by algorithmic overcollateralization—and the hope that black swan events don’t bankrupt the system. Because what could go wrong in DeFi?
Slashing risk
Since Ethereum started allowing users to stake in 2020, validators have been slashed 474 times, according to beaconcha.in data.
In one high-profile incident in 2023, Bitcoin Suisse, a company that provides staking services for institutional clients, lost almost $200,000 after 100 of its newly set up validators were slashed.
The financial damage caused by slashing on Ethereum is small compared to hacks or DeFi protocol bugs. Still, many crypto security researchers worry that an event where thousands of validators are simultaneously slashed is a serious risk.
Chainproof’s offering isn’t the first insurance product for Ethereum stakers.
Nexus Mutual, a crypto insurance alternative, offers coverage that pays out on each individual slashing incident and covers losses up to a predetermined amount. However, it does not guarantee yearly returns.
Chainproof’s insurance differs in that it will reimburse losses of 95% to 98% of the CESR benchmark rate over a one-year period. If their total earned staking rewards fall below this level, the policy automatically reimburses them, guaranteeing the amount of rewards they will receive.
It’s a small difference, but one that Chainproof’s customers say is needed for institutional crypto adoption at scale, Don Ho, the firm’s co-founder and CEO, told CoinDesk.
The firm will launch its staking coverage on June 1 with early access programs for large-scale validators and institutional staking providers.
Several companies involved in Ethereum staking, including Blockdaemon, Pier Two, Globalstake, and P2P, already plan to offer Chainproof’s coverage to their clients.
