Leading liquid staking protocol Lido Finance revealed on Wednesday that 20 Ethereum validators related to one of its infrastructure partners had been slashed of their ETH holdings.

The company said its penalties already amount to 20.04 ETH, currently worth $30,900.

What is “Slashing?”

In an update over Twitter, Lido said that the problematic validators – connected to the “enterprise-grade” Ethereum node provider Launcnodes – have already been taken offline.

The following day, Lido claimed to have identified the ”root cause” of the slashing, for which a “post mortem” will be published in the coming days. “Small details” are still being investigated.

“The Lido DAO has a cover fund of ~6,200 stETH to help mitigate the slashing impact, but it does not trigger automatically,” wrote Lido. “In all previous instances, damages have been covered by the relevant operator(s), or through this fund.”

A validator’s role is to propose new blocks to Ethereum’s blockchain, and to attest to blocks proposed by others for their validity. Validators are more likely to be chosen by the network for the former role if they stake more ETH, and will be rewarded with more ETH over time as a result.

On the other hand, slashing occurs when an Ethereum validator doesn’t fulfill its responsibilities properly. An example could include proposing more than one block at the same network block height, or other ways of contradicting its own previous advertisements to the network.

Slashing Penalties

Slashing penalties can also accrue for validators that remain inactive for extended periods of time. Lido estimated that its penalties will accrue to 23.06 ETH before it can withdraw its ETH from the slashed validators.

“Infra downtime penalties and overall missed rewards (excl. EL rewards) amount to 5.663 ETH (including slashed validators).” Lido added.

Launchnodes has already disbursed 25.663 ETH to compensate slashed stakers, and will contribute more ETH if the final penalty accrues beyon