Chainproof Launches Insurance Product for Ethereum Stakers Against Slashing Losses
Chainproof launched a product for Ethereum stakers that provides protection against slashing while ensuring a minimum annual yield. Slashing penalizes validators for errors, which can occur due to software bugs or human mistakes.
- The product was developed in partnership with IMA Financial Group.
- It tops up stakers' yields if returns fall below the Composite Ether Staking Rate (CESR).
- CESR represents the average staking yield from all Ethereum validators.
- Ethereum stakers currently earn around 3.5% annually.
Slashing Risk
- Since 2020, Ethereum validators have faced slashing incidents 474 times.
- A notable incident involved Bitcoin Suisse losing nearly $200,000 due to slashed validators.
- Slashing risks are perceived as less severe than hacks or DeFi protocol bugs, but simultaneous slashing of many validators poses a significant threat.
Chainproof's insurance differs from existing products like Nexus Mutual by reimbursing 95% to 98% of losses compared to CESR over one year, guaranteeing returns. Early access will begin on June 1, targeting large-scale validators and institutional providers. Companies such as Blockdaemon and Pier Two plan to offer this coverage to their clients.