There are 3 ways a user can end up getting slashed. These are, in increasing levels of severity, being late, not endorsing data at all, and endorsing the wrong data.

Since the worst thing someone can do in the system is provide the wrong data, incorrect data is treated the most severely. In this case the entirety of the offending user’s collateral is confiscated.

The next type of offense occurs when the user provides no data. This case cannot be distinguished from a type of denial of service attack, a chain of which could prevent the dataset from ever finishing. Thus, this offense is punished by confiscating half of the user’s collateral. Since an on-time user cannot be bumped, the cautious user could wait until data is available, stake, and then immediately endorse data to shorten the window during which a catastrophic failure can happen as much as possible. There would have to be some sort of failure that completely prevents a user from endorsing within the span of the couple minutes it takes to endorse after staking for this type of slash to occur. This case should be very rare for honest users.

For the last case, once someone is late, they can either try to send in their endorsement or they can withdraw their stake with the late penalty applied and the cooldown requirement removed. Since a user can be bumped once they’re late, a late user might have been bumped by the time they send in their endorsement. In this case, the algorithm will check for an available spot or another user to bump, but this might fail and the user will have to wait and watch for an opportunity to try again. If endorsing is successful, then the payment will come close to covering and often exceed the slashed amount. A late user should always wait and try to send in their endorsement to minimize the effect of being late.

When it comes to slashing late users, the biggest factor is whether or not the user got an endorsement in or if they essentially just blocked a spot for 15 minutes. The users who are late enough to be replaced and cannot get another spot are slashed 20% of their stake, whereas the user who manages to still secure a slot is only slashed 2% of their stake. For a user with the maximum staking bonuses, the minimum pay rate is 3% (+/- the difference for endorsing only vs providing), so they would still net ⅓ of their normal pay.

In addition to slashing collateral, there is a concept of reputation, and that is also slashed for the transgressions listed above.

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