Risks & Mitigation

Here you will find an overview of potential risks associated with participating in Exocore as a validator, such as slashing, and covers potential strategies to mitigate these risks and help validators

Participating in Exocore as a validator offers significant rewards, but it also comes with inherent risks. Understanding these risks and implementing effective mitigation strategies is crucial for protecting your staked assets.

1. Slashing Risks

Risk Overview: Validators may face slashing penalties if they exhibit harmful behavior such as double-signing or prolonged downtime. Slashing can result in a loss of a portion of the validator’s staked assets, directly impacting their financial stake in the network.

Mitigation Strategies:

• Robust Monitoring: Implement 24/7 monitoring tools to ensure your validator node is always online and responsive. Use alert systems to notify you immediately if your node experiences issues.

• Secure Key Management: Ensure that your validator’s private keys are stored securely, ideally using hardware security modules (HSMs) or dedicated hardware wallets like Ledger devices to prevent unauthorized access or accidental double-signing.

• Redundancy and Backups: Set up redundant infrastructure to minimize downtime. Consider having a backup node in a different location or on a different server that can take over in case your primary node fails.

• Regular Audits: Periodically audit your validator setup, including reviewing key security practices and node performance, to identify and address potential vulnerabilities before they result in slashing.

Unlike Cosmos Hub where validators are not required to self-delegate, Exocore mandates a 1000 USD minimum.

2. Network Security Risks

Risk Overview: Validators are targets for network attacks, such as Distributed Denial of Service (DDoS) attacks, which can disrupt operations and lead to downtime or slashing.

Mitigation Strategies:

• DDoS Protection: Use services or tools that provide DDoS protection to shield your validator from such attacks. Cloud providers often offer built-in protections, or you can use third-party solutions.

• Firewalls and Network Isolation: Configure firewalls to restrict access to your validator node, allowing only necessary traffic. Network isolation techniques, such as running your node behind a VPN, can further reduce exposure to potential attacks.

Blocking incoming P2P connections is generally not recommended. Consider allowing only trusted connections or denying known malicious ones.

• Rate Limiting and Throttling: Implement rate limiting and throttling to manage incoming traffic and prevent overwhelming your node with requests.

3. Economic Risks

Risk Overview: Market volatility and changes in network dynamics can impact the value of staked assets and rewards, potentially leading to reduced earnings or loss of principal.

Mitigation Strategies:

• Diversification: Diversify your investments across multiple assets or blockchain networks to reduce exposure to any single economic downturn.

• Active Participation: Stay informed about network updates, governance proposals, and market trends to make informed decisions that protect and grow your staked assets.

4. Operational Risks

Risk Overview: Operational errors, such as incorrect software configurations or delays in upgrading to new software versions, can result in node downtime, slashing, or missing out on rewards.

Mitigation Strategies:

• Automation: Automate routine tasks, such as software upgrades and configuration backups, to reduce the risk of human error. Use tools like Cosmovisor to handle automatic binary upgrades.

• Test Environments: Before applying changes to your main validator node, use test environments to ensure that updates or configuration changes work as expected without introducing risks.

• Regular Maintenance: Schedule regular maintenance windows to perform necessary updates, checks, and backups, ensuring your validator remains in optimal condition.