What You Need to Know
- Chainproof has launched a new insurance solution for Ethereum stakers to shield against slashing while assuring a minimum yearly yield.
- This initiative, developed with IMA Financial Group, will secure yields aligned with the Composite Ether Staking Rate (CESR).
Crypto insurer Chainproof declared a new insurance product that enables Ethereum stakers to mitigate slashing risks while guaranteeing a minimum annual yield. Slashing, which, though infrequent, poses a significant threat to stakers, penalizes validators for submitting incorrect data by deducting a portion of their tokens.
According to data from beaconcha.in, since Ethereum permitted staking in 2020, there have been 474 slashing incidents. In one notable case in 2023, Bitcoin Suisse faced losses totaling nearly $200,000 after its validators were slashed.
Chainproof’s offering is notable because it will cover yield deficiencies caused by slashing. If the earnings drops below the CESR rate, the policy will refund the difference to maintain the guaranteed yield. The CESR benchmarks average staking rewards generated by Ethereum validators and was initiated by CoinDesk Indices and CoinFund.
“As staking becomes increasingly crucial alongside newer institutional products, ensuring yield will be critical,” noted Chris Perkins from CoinFund.
Fundamentally, staking — locking tokens on a blockchain for transaction validation — allows Ethereum stakers to earn approximately 3.5% annually. Chainproof’s product aims to facilitate institutional adoption by minimizing risks associated with slashing.
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