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Howdy!

I’m wearing a pretty cool sweater vest today, but hardly anyone came into the office to notice it. Tough scene.

Today, we’ve got a Solana slashing proposal, sandwiching profitability, and onchain gifts:

Solana staking may become riskier

A couple months after rumors started trickling out, the Solana developer shop Anza — which was spun out of Solana Labs earlier this year — put out a pair of proposals to consider implementing slashing in the network.

Solana has notably never enabled slashing, which is a popular method to keep validators honest in proof-of-stake blockchains. By putting slashing live, Solana would have a way to punish validators who slow down the network — but it would also introduce a vector of risk for SOL stakers.

Solana validators run software and propose and vote on blocks containing Solana transactions. Every 400 millisecond slot, a validator becomes the leader who proposes a block for all the other validators to vote on and verify. If the block looks good, it’s confirmed. If there are problems, a slot can be skipped and revisited later so that Solana can still run fast. Currently, there is no way to punish leaders who mess up proposing blocks, or validators who vote late or incorrectly, slowing down Solana’s consensus.

For now, the proposed slashing program would only slash validators for so-called duplicate blocks, where the same block is created twice. Anza is yet to decide what the slashing economics would look like at a granular level, but the SIMD author recommended burning, or functionally destroying, the slashed stake. Anza’s Ashwin Sekar also proposed a parabolic slashing curve where if 5% of a validator’s stake commits a violation, 1% of their stake is burned, while if 33% of the stake commits a violation, 100% is slashed. Ethereum’s slashing curve is linear, Sekar explained on a validator discussion call.

Sekar also said the slashing proposal is still in its early stages, and such an update would be rolled out in late summer 2025 at the earliest.

Anza’s proposal seemed to be met with general early approval from Solana’s technical community.

“I can think of many scenarios in Solana where slashing is critical,” Temporal researcher Ben Coverston said on X. “Slashing is necessary to make malicious behavior -EV.”

We don’t know how slashing might look on Solana, but on Ethereum, slashing incidents tend to be quite rare. Less than 0.04% of active Ethereum validators have ever been slashed, according to Ethereum research shop Consensys. Simply put, most validators tend to do what they’re supposed to do nearly all of the time in blockchain settings with slashing enabled.

Still, turning slashing on would add a risk vector for Solana stakers, who would see their rewards suddenly dip if their delegated validator had their stake suddenly burned. This risk extends to restaking protocols as well, as some have warned of “slashing cascade” risks for Ethereum restaking outfit EigenLayer. 

“[I] hope [you're] staking with validators you actually trust,” Mert Mumtaz, CEO of Solana’s largest validator Helius, said on X.

— Jack Kubinec

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Renaud Partners is the premier go-to-market consulting firm for early-stage Solana teams.

We’ve been deeply involved in the community since 2021, supporting some of the best known projects in the ecosystem. We help teams with their go-to-market, brand positioning, social and PR, and fundraising strategy, and we also work across other ecosystems including Monad, Base and TON.

If you're a team looking to expedite your marketing success, let’s talk: [email protected] or @rockin_renaud on telegram.

Sandwiching siphons funds away from traders, but it isn’t always profitable for the attackers themselves:

This chart from Flipside analyst Marqu shows 80% of sandwiched trades were profitable for one particular sandwich bot over a two week period. 

80% is a pretty good hit rate, but it’s still interesting to me that one in five times a sandwich attacker manipulates prices for their own benefit, they end up losing money.

— Jack Kubinec

Brought to you by:

Renaud Partners is the premier go-to-market consulting firm for early-stage Solana teams.

We’ve been deeply involved in the community since 2021, supporting some of the best known projects in the ecosystem. We help teams with their go-to-market, brand positioning, social and PR, and fundraising strategy, and we also work across other ecosystems including Monad, Base and TON.

If you're a team looking to expedite your marketing success, let’s talk: [email protected] or @rockin_renaud on telegram.

A message from Marqu, data analyst at Flipside: