K ♥ · Incentive · Draft

Penalties

A rule-breaker loses stake, rights, or standing, so the cost of cheating is higher than the gain.

The Penalties card: K ♥ of Incentive

How it works

The DAO writes the rules and the penalty for each breach in advance. Members put something at risk before they take part: a deposit, a role, or a reputation score. A contract, a jury, or any member with proof can flag a breach. When the breach is confirmed, the punishment applies automatically, for example part of the deposit is destroyed or voting rights are removed. Some designs pay a share of the forfeited stake to the person who reported it. The rest is burned or sent to the treasury.


Use it when

  • You rely on members to behave and need the rule to hold without a court.
  • Protect a shared system from validators, jurors, or oracles who lie.
  • Make an attack cost more than the attacker could ever win.

Watch out for

  • Honest members can be punished for bugs or downtime, which drives careful people away.
  • Whoever decides that a rule was broken holds real power and needs a check.

Example

Ethereum. Ethereum's proof-of-stake chain has slashed validators since 2020, destroying part of their staked ETH when they sign conflicting blocks and ejecting them.


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