- As it stands today, there is no slashing or associated risk for the ether.fi protocol. Currently, none of the AVSs supported by ether.fi have enabled this module. Even if an AVS chooses to activate slashing in the future, ether.fi must explicitly opt-in through its operators before slashing can become effective for eETH.
- Slashing on EigenLayer is not enabled by default. Operators who opt into an AVS with slashing enabled will undergo an evaluation process, and their participation will be carefully managed to ensure appropriate risk controls are in place.
- New slashing capabilities empower AVSs to define and enforce custom slashing logic, with penalties isolated to each operator’s allocated Unique Stake. Risk management is handled at the AVS level, with protections tailored to each AVS’s framework and enforced through operator-specific participation.
- Operator Sets and Unique Stake introduce fine-grained control over rewards, risk exposure, and task selection, enabling operators to optimize participation based on capabilities and risk tolerance.
With slashing set to go live on EigenLayer’s mainnet on April 17, 2025, AVS will gain the capability to define their own cryptoeconomic frameworks, introducing customized rewards and penalties for participating operators. Chaos Labs is conducting a detailed analysis of these recent EigenLayer security upgrades, aiming to identify emerging risks and strategic opportunities for improving overall risk management, in order to contribute to a more secure and resilient restaking ecosystem within the ether.fi protocol.
New Slashing Mechanism
Under the new mechanism, an AVS that has defined slashing conditions can now invoke a slashing function in the EigenLayer contracts to penalize an operator. The slashing action deducts a portion of the operator’s stake and renders those funds permanently inaccessible at the protocol level. Slashing is opt-in—only operators who have chosen to allocate stake to an AVS with slashing enabled are subject to its specific slashing rules. It is up to ether.fi’s operators to decide at what point they will accept slashing risk at the discretion of ether.fi. The slashing is limited to the maximum amount of Unique Stake an operator chooses to assign to an AVS.
The slashing logic and its execution reside entirely at the AVS level, not at the core EigenLayer protocol level. This allows each AVS to tailor slashing to specific tasks or to calibrate it according to the severity of failures. Furthermore, AVSs may implement their own safeguards around slashing, such as time-locks, challenge periods, or fraud-proof schemes. While operators cannot define the slashing logic themselves, the new slashing module provides them with the flexibility to opt in or out of different slashing configurations.
Operator Sets, Unique Stake, and Rewards V2
Alongside the new slashing mechanism, EigenLayer’s security upgrade introduces three foundational changes to its architecture: Operator Sets, Unique Stake, and enhanced reward structures. These changes aim to create a more granular and accountable system with better-aligned incentives and reduced systemic risk.
Operator Sets allow AVSs to define specific groups of operators for particular roles or task classes. Each set can have customized rewards and slashing conditions. For example, an AVS might establish separate sets for high-performance tasks that require specialized hardware, and for lighter computational workloads. Operators can selectively participate by delegating their stake into specific Operator Sets that align with their capabilities, infrastructure, and risk preferences. Operators and stakers are given the opportunity to withdraw delegation if they are uncomfortable with new risk profiles. However, a 14-day Deallocation Delay applies, during which the stake remains slashable even after deallocation. This delay introduces an opportunity cost for stakers and ensures continued accountability.
Unique Stake enables operators to allocate dedicated portions of their staked assets to specific Operator Sets within an AVS. Crucially, an operator’s total allocations cannot exceed 100% of their stake, ensuring that there is no overlapping slashable collateral. Only the AVS to which a portion is uniquely allocated can slash that portion, eliminating the prior risk where an operator’s entire stake was vulnerable to any single AVS they participated in. This mechanism is subject to an operator-defined Allocation Delay—a configurable waiting period that must elapse after an operator schedules a new allocation. The purpose of this delay is to give stakers a chance to respond: if a staker is uncomfortable with the operator’s new allocation (and its associated slashing risk), they may withdraw their delegation during this window.
In addition, the new architecture allows operators to configure their fee percentage for each Operator Set they join. By default, a 10% fee applies unless otherwise specified. Operators can adjust this fee to reflect the level of effort required or other considerations specific to the responsibilities of each set.
Risk Considerations
Once ether.fi’s operators opt into the Operator Set and Unique Stake framework, each operator gains finer control over both their income structure and risk exposure by selectively joining sets that align with their capabilities and risk tolerance. By enabling more granular reward distribution within Operator Sets, the model ensures that compensation more accurately reflects the associated risk. This optimization may, in turn, improve eETH yields as operators target higher-reward opportunities across various sets. However, we still recommend the protocol to implement robust monitoring systems capable of tracking these differentiated reward structures. Active management will likely be necessary to preserve competitive yields while maintaining sound risk exposure.
As there are no protocol-enforced guardrails around slashing, we recommend careful evaluation of any AVS that enables slashing, and delegation only to AVSs that publicly commit to robust, transparent slashing safeguards and have established safety measures in place. In addition, ongoing due diligence of AVSs and the maintenance of up-to-date risk disclosures are essential. We also recommend active monitoring and management of Unique Stake allocations, treating them as quantifiable VaR) segments. This includes promoting operator diversification across sets to mitigate correlated slashing risk.
Furthermore, we recommend to maintain awareness of these protocol-level withdrawal delays and buffers when assessing exposure timelines and plan delegations accordingly.
Additionally, we suggest the protocol consider establishing clear guidelines or recommended ranges for operator fee percentages, helping align expectations and prevent misaligned incentives.
Overall, this model fosters greater transparency, clearer delineation of risk, and more predictable value-at-risk scenarios, while significantly reducing the potential for widespread losses resulting from isolated incidents. When the time comes, the evaluation of whether to opt into an AVS that enables slashing will follow the same approach used in our prior slashing analysis here.