Penalties

What Triggers Penalties?​

Penalties are triggered when the selected proposer for a slot is from the PoN Relay's registered set of validators, but the Payout Pool doesn't receive the expected payment. This can be due to the proposer being offline, builders griefing the relay, or other factors. The calculation and types of penalties are discussed in detail below.

Types of Penalties​

The penalties can be categorized broadly into three types:

1. Validator Penalties

2. Building Penalties

3. Validator Removal

Validator Penalties​

Penalties are applied to validators, who are also known as proposers, if they are at fault. The penalties will be collected from the proposers and paid to the builders.

Builder Penalties​

Penalties are applied when builders are at fault and are taken from the staked amount that was locked by builders at the time of registration. Penalties occur when the builder commits to a slot but fails to request a block, effectively hindering block proposal since blocks are proposed by builders using the proposer's signature.

Validator Removal​

These penalties impact proposers by removing them from the PoN Relay and rendering them ineligible to receive any Ethereum rewards.

Penalty Fee Calculation​

Proposer Penalties​

For proposer penalties, builders are paid average EIP 1559 rewards of the last 5 proposed slots. Builders earn based on the average Priority Fee (Gas Price) as that is the lost opportunity cost of the builder.

Builder Penalties​

Builder penalties are paid to the Payout Pool from the builder’s collateral. The penalty amount is twice the value builder bid to create s block. 50% goes to the payout pool and 50% goes to the reporter. This disincentivized griefing of the proposers.