Summary
This post provides the Renzo community with a risk update post the launch of the fully feature-complete Symbiotic protocol.
There is currently no additional slashing risk as no pzETH Networks have enabled it in their middleware contracts. Chaos Labs and the Renzo team continue to monitor slashing closely and will constantly evaluate all Networks to ensure they provide sufficient Risk-Adjusted Return to pzETH stakers and do not create the risk of a material slashing event on Renzo.
Context
The fully feature-complete Symbiotic protocol launched on the Ethereum Mainnet on January 28, 2025, includes a slashing module.
The Symbiotic Slashing Module itself does not contain slashing logic but instead relies on slashing requests from the secured Network to determine when, who, and how much to slash. The only verification performed by the Symbiotic protocol is to ensure that the affected Network was secured by the operator and LRT (referred to as a Vault in Symbiotic) during the epoch in which the slash is initiated.
The Symbiotic slashing implementation allows for slashing with or without review by a Resolver, which has the power to veto a slashing request. This is architected to be the inbuilt mitigant against malicious or accidental slashing by a network. Renzo’s Vault has implemented slashing with veto with plans to shortly set the Renzo team as the Resolver.
This means that any malicious or unwarranted slashing by any Network receiving security from a Renzo vault can be monitored and vetoed before causing any losses to pzETH holders.
Current Risks and Mitigations
Slashing is technically enabled on Symbiotic, but as of February 7, 2025, none of the Networks secured by pzETH collateral have activated it in their NetworkMiddleware contracts. This means the risk of slashing remains theoretical for now. However, it is not being overlooked.
Chaos Labs, in collaboration with the Renzo team, conducts ongoing diligence on all active Networks receiving pzETH stakes. Using the Risk Assessment Methodology, they ensure that each Network surpasses the acceptable Risk-Adjusted Return (RAR) threshold. This methodology evaluates risk holistically, considering the entire distribution of Networks and Node Operators.
By optimizing pzETH allocation and continuously analyzing potential risks, Renzo aims to safeguard stakers from significant slashing threats due to restaking. Additionally, as the Veto Resolver of its Vault, the Renzo team can override any malicious or unjustified slashings before collateral is burned, reinforcing its commitment to risk management.