Insurance / Digital asset infrastructure / 2023

Aon and Insurance Partners: Examining the Validator Failures Behind Slashing Claims

In March 2023, Lionscraft's predecessor practice delivered a specialist technical programme for insurance-market participants examining how validators fail, when protocols penalise them and which operating controls matter to slashing risk.

AdvisorySecure
2 days
technical workshop, March 2023
3
proof-of-stake ecosystems compared
4
organisations: Aon, Convex, Proof and Sompo
On this page

The story in brief

01 — Situation

Insurance professionals exploring slashing cover needed to assess the failure modes of proof-of-stake networks and the operators running them, not simply the percentage penalty defined by a protocol.

02 — Role

A43 designed and delivered technical education and risk-assessment material for an engagement involving Aon, Convex, Proof and Sompo.

03 — Work

A two-day technical programme covering Ethereum, Polkadot and Cosmos, network penalties, validator architecture, signing controls, high availability, key custody, monitoring, incident response and operational dependencies.

04 — Outcome

A documented, commercially commissioned workshop with specialist materials, exercises and ongoing professional dialogue. This case concerns the completed technical engagement, not ownership of a later insurance product.

Client
Aon · Convex · Proof · Sompo
Industry
Insurance · Digital asset infrastructure
Period
2023
Organisations involved
Aon, Convex, Proof and Sompo
Engagement
Two-day validator slashing-risk workshop
Location
London · March 2023
Services
Advisory · Secure

The challenge

When a backup makes the insured risk worse

Proof-of-stake systems introduce a counterintuitive operational risk: a backup intended to protect service availability may trigger a financial penalty if two systems sign with the same validator key.

An insurer assessing such an operator needs to know more than whether it has redundant servers, penetration tests or an ISO certificate. It needs to understand signing authority, failover arrangements, validator software, operating procedures, service providers and the chain's actual penalty rules.

Aon and other participants needed a technical foundation for discussions about insurability, loss scenarios and controls. A43 was commissioned to bring that validator-operating expertise into the insurance conversation.

The story

01

Day one: from protocol rules to the systems that can break them

The workshop began in London on 28 March 2023. Its materials covered validator functions in Ethereum, Polkadot and Cosmos, including the way penalties arise from missed duties, conflicting signatures and other network-specific events.

The programme linked protocol mechanics with practical operator configurations. Participants examined how validator duties are carried out and where mistakes in software, hardware, personnel or configuration can create exposure.

02

Day two: comparing actual control choices

The technical work extended to key custody, remote signing, hardware-security modules, client diversity, active-standby and active-active systems, failover, access controls, updates, monitoring and incident response.

Those were not interchangeable checklist items. A well-designed resilient service might reduce downtime without introducing duplicate signing; a poorly controlled failover might protect availability while creating a slashable event.

The discussions examined what an underwriter or risk reviewer would need to ask about those choices, and how controls might affect the likelihood and severity of potential loss.

03

Four organisations, one technically focused engagement

The surviving commercial documents place the workshop on 28–29 March 2023 and identify Aon, Convex, Proof and Sompo in the project. The original engagement involved distinct broker, insurer and specialist roles rather than one jointly owned insurance company.

The historical file includes dated work orders and four invoices for the workshop service period. Those records substantiate a paid-scope commercial engagement in the sense of invoiced professional services; they are not evidence that every invoice was collected.

After the workshop, the founder reports continued professional contact with Aon. The source record does not establish a subsequent A43 mandate to create, price or underwrite an insurance policy.

04

Technical knowledge usable in a product discussion

The delivered materials gave insurance participants a more precise basis for discussing validator risks: what could fail, how an operator's configuration influenced exposure, and which evidence would be relevant to an assessment.

Aon subsequently published its own materials about staking and slashing insurance. Those publications are useful external context for the insurance market, but this case study credits A43 only for its documented workshop and related technical work.

What Lionscraft did

Results and impact

01

A completed two-day technical workshop on 28–29 March 2023.

02

Specialist materials comparing three proof-of-stake ecosystems.

03

Detailed examination of signing, failover, monitoring and operator controls relevant to slashing losses.

04

Commercial records covering work orders and invoiced professional services for the named organisations.

05

A technical contribution to insurance-market understanding, without an unsupported claim that A43 subsequently issued insurance or secured underwriting capacity.

Evidence and further reading

The public sources behind this story: announcements, partner reports and coverage. 3 sources.

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