New Research on Validator Incentives and Restaking Security
The Cardano Foundation, IOG, and Gauntlet collaborate in a paper diving into the security threats of restaking protocols
A self-sustainable blockchain requires well-designed incentives for validators. As Cardano’s reserve emissions gradually decline over time, understanding how validators can earn sustainable rewards becomes increasingly important.
Today, validators – also called stake pool operators (SPOs) – are primarily rewarded through transaction fees and staking rewards funded by the protocol’s reserve. However, like in many other blockchain ecosystems, Cardano reserves are finite, compromising the long-term incentives to maintain the network.
In other blockchain ecosystems, additional reward sources are emerging. These include opportunities related to maximal extractable value (MEV) and restaking, where validators provide security not only to the base layer but also to external protocols and supporting infrastructure.
In a restaking model, validators can opt in to secure additional protocols such as bridges, data availability layers, or middleware protocols. By extending their security guarantees to these protocols, validators can earn additional rewards. Most current restaking designs, however, rely on slashing mechanisms: if a validator misbehaves, part of their stake can be confiscated.
While slashing is intended to deter malicious behavior, it also introduces new systemic considerations. In particular, when the same stake secures multiple protocols, slashing triggered by one protocol can reduce the stake securing the others. This interdependence creates complex incentive dynamics that must be carefully understood in order to safely deploy such mechanisms.
To study these dynamics, we analyzed the incentive structure of restaking systems and their slashing mechanisms. This research is particularly relevant for Cardano because the protocol does not natively rely on slashing or locked stake. Understanding the incentive properties of slashing-based systems therefore becomes an important step before evaluating whether similar or alternative mechanisms could be useful for the Cardano network.
The Cardano Foundation actively studies incentive design questions that are relevant for the long term evolution of blockchain systems, including mechanisms currently being explored in other ecosystems.
In joint work with Paolo Penna (IOG) and Tarun Chitra (Gauntlet), we identified structural vulnerabilities in current restaking designs. Our research shows that no slashing mechanism can simultaneously satisfy several desirable properties while also eliminating incentives for Sybil attacks. As a result, slashing mechanisms inevitably involve trade-offs between security guarantees and strategic behavior.
We presented the research at the 5th Workshop on Decentralized Finance (DeFi), held on 6 March 2026 in association with Financial Cryptography 2026. The Cardano Foundation encourages everyone to read the paper and share it across their networks.
This work represents a first step toward understanding the economic foundations of restaking systems. A key open question remains regarding how to design mechanisms that provide additional validator incentives without relying on slashing, which is an active area of ongoing research.