Receiving slashed funds as a middleware


After a middleware has slashed a staker, is it able to claim the slashed ETH, or the ETH is simply burned? If the middleware is able to claim the slashed ETH, what are the restrictions around this?



yes ok so let’s consider 20B restaked eth secures services on eigenlayer, if slashing happens on 10 services, services will ask where is that slashed money going to go to ?

a middleware has the possibility to pre-bought insurance bonds :

suppose you are a bridge and you are not transacting more than 1B per day and it takes you 1 day to detect an attack, it could make sense to pre-bought 1B of insurance bonds.

this could then be sold considering the particular slashing priority that you get so you have the guarantee of that amount from the slashing insurance bonds, no matter what happens next.

would also bring more security for the users of the bridge.

hope that helps,

more details should be coming soon tho


I guess what I am getting at is the potential of using slashing as a liquidation mechanism so that staked ETH can directly be used in DeFi. For example, a lending/borrowing platform could allow a user to take a loan against their staked ETH and then slash them, collect the funds, and pay back the debt when the collateral ratio of their position falls below a minimum. I know a number of protocols are interested in this, but the team has expressed some concerns about long term safety for Ethereum. Will this be discouraged or prevented?