Staking Risks
What are the risks of staking ETH with Stader?
Using ETHx involves certain inherent risks, as with any form of digital asset investment. While Stader goes to great lengths to ensure the security of your staked assets, it's essential for users to be aware of these risks and make informed decisions when staking their assets. Here are some of the main risks that users should be aware of:
Smart Contract Security Risk Like all DeFi protocols, Stader's ETHx protocol is governed by smart contracts, which could potentially contain vulnerabilities or bugs. To minimize this risk, Stader ensures that its smart contracts are open-sourced, rigorously audited, and covered by an extensive bug bounty program.
Native Chain - Technical Risk The Ethereum Chain is still a technology under active development. While a large number of developers and researchers are working to ensure their stability and security, there's no guarantee that it is entirely free of errors. Vulnerabilities inherent to the Ethereum Chain could potentially affect the staking process and the value of ETHx.
Wallet and Downstream Apps Wallets and third-party applications may be required to access staking. Users should independently evaluate the security of wallets and other third-party apps. Please note that Stader does not take responsibility for the security of the wallets or third-party applications used to access the staking solution.
Exchange Rate Manipulation The ETHx-to-ETH exchange rate ensures users receive the correct amount of ETHx (when staking ETH) and ETH (when unstaking ETHx). If this rate is manipulated by malicious actors, ETHx holders could potentially withdraw significantly more ETH by unstaking through Stader or mint ETHx for far less ETH on the Stader dApp.
Slashing Risk Ethereum validators can face penalties, including the potential loss of all staked funds, if they fail to fulfill their duties. Stader, however, tries its best to mitigate this risk by taking a 4ETH and 0.4 ETH worth of SD bond from the Node Operators.
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