Could this blockchain protocol reduce exposure to PoS slashing risks?

A new blockchain protocol helps delegators in proof-of-stake protocols to mitigate slashing risks — their exposure to financial penalties whenever a validator fails to meet a network’s reliability requirements.

The DSLA Protocol is a decentralized marketplace for peer-to-peer service level agreements, otherwise known as SLAs for short. This allows anyone to hedge against the risk of service delays and disruptions, while cutting out legal teams, support teams and insurance companies in the process.

Executives behind the project estimate that 80% of businesses currently use SLA contracts to protect themselves against the failures of third-party service providers. However, they argue that SLAs are often slow to deploy, and given the fact that they may only be updated once or twice a year, they often don’t evolve in line with current circumstances.

Through this approach, decentralized SLAs can be rolled out on the blockchain within five minutes, and customers can adjust the size of the contract based on their attitude to risk. Providers also have more of an incentive to create contracts for their customers, as they are rewarded for operational excellence, the team says. As the protocol’s website explains: “It enables anyone to vouch for the reliability of a service, earn rewards when the service performs as expected, and claim financial compensation when the service doesn’t meet expectations.”

The tokenomics

This protocol is powered by ERC-20 compliant DSLA tokens, which are staked and transferred between service providers, the people who vouch for them and service customers. The flow of these digital assets depends on whether service levels have been good or bad, and they also serve as an access key to the DSLA network’s decentralized app.

Development on the science behind this infrastructure began back in February 2018. Now, the team is making the final preparations for a milestone that has been long in the making: the launch of its mainnet in November.

Stacktical, the parent company behind DSLA, says that the use cases for this protocol could extend far beyond staking. It wants to help businesses deliver a better quality of service to customers and has set its sights on the aviation industry where the cost of flight delays runs into many tens of billions of dollars a year.

Co-founder and CEO Wilhem Pujar believes DSLA could end up giving customers a far better deal than what they get now, and in turn, this would result in an improved and stress-free, door-to-door passenger experience in the future. He has also urged businesses to focus more on customer retention than customer acquisition, pointing to research that suggests a 5% increase in retention can boost profits by a staggering 100%.

The DSLA protocol is also set to benefit other sectors, including firms involved in web hosting and cloud computing, climate change and environmental governance, and fintech API providers. Developers are going to be invited to build DApps on this protocol to ensure that bespoke solutions can match a company’s exacting needs.

Partnerships and progress

Back in February, Stacktical announced that it had received a grant from the Web3 Foundation so the company can help predict the scalability of the Polkadot blockchain. It has also secured a plethora of partnerships, including with the Harmony and Band protocols.

Harmony is the first proof-of-stake blockchain network that is going to officially support the DLSA protocol during an incentivized beta that’s taking place on Sept. 30, 2020. The goal of this initiative is to validate the functional, performance, reliability and security assumptions of the DSLA Network decentralized application.

Meanwhile, the Band Protocol’s data oracle is going to empower the enforcement of DSLA smart contracts, connecting its protocol to the staking analytics of its decentralized performance monitoring data indexer. According to the team, BAND delegators will also be able to hedge against bad yields, slashing and late staking rewards payouts.