In a [[Proof of Stake]] blockchain, [[Validators|validators]] are required to stake a certain amount of funds as collateral for the right to vote and then be rewarded for maintaining network consensus. If validators stop performing these duties, block [[Finality|finality]] comes to a halt as there is no consensus around the correct chain, which can then trigger an inactivity leak. >[!example] Examples >From August 14th-17th, 2021 on Ethereum’s testnet "Pyrmont", some software bugs and other factors led many nodes into non-finality state; Pyrmont experienced its first-ever 'inactivity leak'. The incident was resolved after several days once enough nodes were back online and participating regularly. > >On May 11, 2023, [Ethereum experienced an inactivity leak](https://www.coindesk.com/tech/2023/05/17/ethereums-loss-of-finality-what-happened/) on its mainnet due to a loss of finality. This event was significant as it marked one of the first major instances where an inactivity leak occurred not just on a test network but on the live Ethereum blockchain. When a large number of validators go offline or become inactive like this, an inactivity leak effectively serves as a failover mechanism. To disincentivize downtime, this mechanism imposes penalties by gradually reducing or "leaking" staked funds of non-participating validators, serving two key purposes: - Mitigating the impact of malicious nodes by reducing the economic power of inactive validators, and - Incentivizing a prompt return to validator duties; moving back to a state of regular consensus. The severity of the penalty depends on the protocol's implementation. However, some versions may penalize validators based on whether the attack seems coordinated, or if it is an isolated incident. [[Slashing]] is a more severe type of penalty imposed on validators.