K ♥ · Incentive · Draft
Penalties
A rule-breaker loses stake, rights, or standing, so the cost of cheating is higher than the gain.
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.