Slashing risk in crypto refers to the potential loss of staked cryptocurrency that occurs when a validator on a Proof-of-Stake (PoS) blockchain network violates consensus rules.

This penalty mechanism is designed to maintain network security and integrity by discouraging malicious or negligent behaviour, such as double-signing blocks, prolonged downtime, or validating invalid transactions.

When a validator is caught breaking these rules, a portion of their staked tokens is automatically confiscated by the network, and they may also be removed from the active validator set.

The severity of the penalty varies, with minor infractions like downtime resulting in smaller losses, while serious violations like double-signing can lead to significant or even total forfeiture of the staked amount.

This risk extends beyond the validator themselves, as delegators who have staked their assets with a compromised validator also face proportional losses.

https://www.dbm.academy/faq for more blockchain vocabulary.

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