Validator State Recovery Following Deposit Signature Mismatch Incident

Governance
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Validator State Recovery Following Deposit Signature Mismatch Incident

Context

This proposal addresses a recent incident in which a staker’s deposit transaction, affected by a bug in the Third-Party User Interface (UI) and compounded by the lack of signature verification, resulted in the incomplete creation of a validator.

The deposit process is related to the validator pubkey 0xafd0ad061f698eae0d483098948e26e254f4b7089244bda897895257c668196ffd5e2ddf458fdf8bcea295b7d47a5b37 (BeraHub Explorer Link), the total amount of BERA tokens impacted by the incident are equal to 901,393.69 BERA. Following transactions:

Trx #1: BERA Transaction Hash: 0xb93c1198f9... | BeraScan

Trx #2: BERA Transaction Hash: 0x72ba3c5a51... | BeraScan

Trx #3: BERA Transaction Hash: 0x0e0af1c5aa... | BeraScan

At the time of the first deposit, the object to be signed was constructed for a stake of exactly 10,000 BERA. However, assuming the need to cover transaction fees, the staker sent 10,001 BERA. This mismatch was not highlighted due to the absence of complex validation checks. As a result, the transaction was assumed accepted as valid at the protocol level, and the BERA tokens were effectively burned on the Execution Layer. This discrepancy led to a divergence between the states of the Execution and Consensus Layers, ultimately preventing the validator from being properly activated and participating in network consensus.

This incident could have been detected if the checks outlined in the official documentation had been fully followed. This procedural gap contributed to the mismatch going unnoticed, allowing the transaction to proceed despite the inconsistency. A more rigorous adherence to the documented validation flow may have mitigated the issue at an earlier stage.

Although the validator appeared as expected in the BeraHub Explorer, the lack of signature checks on the Consensus Layer contributed to the issue. As the transaction was assumed valid in the Berascan Explorer, the staker proceeded to stake the remaining amount to the same validator and effectively burned the tokens.

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Source:Validators | BeraHub

Proposal

We are proposing to update the beaconchain state to update the affected validator from an inactive state to an active state with the exact staked amount/voting power it was supposed to be assigned with a valid deposit.

It is important to emphasize that this proposal does not confer any special treatment, preferential handling, or unfair advantage to the affected staker. The staker clearly intended to stake, but due to insufficient validation mechanisms, the funds were unintentionally burned.

By activating the validator with the originally intended stake and corresponding voting power, we are not creating a new allocation or issuing compensation, but simply rectifying a divergence caused by an operational oversight. This is not a bailout nor a remedy for a failed trade or fund exploit, but a targeted fix to preserve protocol integrity and fairness within the staking system.

Areas of Improvement

  1. As a Node Operator, it must be ensured that all checks for the entire deposit process (From Execution to Consensus Layer) are duly completed, not rely on third party sources to validate the deposit result and follow the technical documentation diligently and make sure information is always updated and made available to all key stakeholders.
  2. As a Custodian, implement robust internal controls, including pre-deposit simulations and validation logic that confirms whether the deposit amount corresponds accurately with the provided deposit signature. Only after this verification step should the actual transfer of funds from custodial wallets occur. This extra layer of safety is crucial to prevent irreversible loss of funds due to malformed or invalid deposits.
  3. To further enhance transparency and reliability for all participants, it would be beneficial for Berachain’s hub explorer (hub.berachain.com) to reflect the consensus layer state—potentially aligning with the functionality of Ethereum’s beacon chain. This would allow for clearer tracking of deposit activity and to discover any potential issues at the consensus level to any end users/stakers with no access to full nodes or in deep technical preparation.
  4. Possibly implement all feasible ETH like features in the deposit contract to safe guard the staking and deposit process like BLS signature checks with deposits, etc.

Luganodes’ Strategic Role and Contributions To Berachain Ecosystem

  1. Luganodes is one of the 38 genesis validators and has worked closely with the team for over a year to support the mainnet launch across all phases. We actively participated in every testnet, contributing through bug fixes, log reports, and performance feedback—consistently delivering top results.
  2. Luganodes’ built out a custom open-source berachain indexer which provides essential capabilities such as Historical Data Verification, Independent State Validation, Anomaly Detection etc for the community to use and build on top of.
  3. Luganodes is one the first large operators of Infrared Finance. Additionally we also support by providing RPC and Archive Nodes for both mainnet and testnet.
  4. Luganodes has built a proprietary rewards maximiser tool to ensure stakers earn maximum APY.
  5. Luganodes has been running more than 2 mainnet Berachain validators since the genesis with significant stake maintaining high uptime showcasing strong operational capabilities.
  6. Luganodes has published various content about Berachain to bring more attention to the ecosystem:
  1. Luganodes has strong working partnerships with USDT0 and Infrared Finance along with other key institutional players who have tremendously contributed to Berachain to bring additional capital into the ecosystem and position the project for long-term strategic features (e.g., stablecoin issuance).
  2. Luganodes contributed and will continue to onboard several institutional investors and large token holders into the Berachain ecosystem. By encouraging active participation in staking, we’ve contributed to increasing the network’s total value locked (TVL) and strengthening its security —supporting long-term alignment between the protocol and its stakeholders.

Conclusion

This proposal aims to correct a one-time operational error that occurred during the validator deposit process. The affected party intended to stake and contribute to network security, but due to a lack of validation checks, the deposit was partially processed—burning the funds on the Execution Layer while failing to register the validator on the Consensus Layer.

Approving this proposal would not provide any special advantage or recovery from misuse—it would simply activate the validator as originally intended.

Luganodes has been a committed and constructive participant in the Berachain ecosystem from its early testnet days. Through deep technical involvement, open-source tooling, ecosystem support, and collaboration with key stakeholders, we have consistently demonstrated our commitment to Berachain’s success.

As unfortunate as this incident was, it also served as a valuable drill, offering important lessons for stakers, custodians, operators, and the Berachain team alike. Each party involved has taken this as an opportunity to learn and improve, ultimately contributing to the enhanced security and robustness of the entire Berachain ecosystem.

We strongly believe in the long-term potential of Berachain and request the community’s support in resolving this issue fairly and transparently—for the benefit of the network, its participants, and future resilience. By voting in favor, you’re helping ensure that as Berachain grows, it does so with the maturity and resilience of a truly decentralized network.

About Luganodes

Luganodes is a self-funded, non-custodial staking provider, supporting over 50 proof-of-stake networks with more than $3 billion in assets staked. Started through the Lugano Plan B initiative by Tether and the City of Lugano, we’ve steadily built a reputation for transparency and performance. Our infrastructure is monitored 24/7 by a dedicated SRE team, maintaining consistently high uptime across all networks. We place strong emphasis on security and compliance, with independently audited systems meeting SOC 2 Type II, GDPR, and ISO 27001 standards. Luganodes ranks among the top validators on networks such as Berachain, Polygon, Polkadot, Sui, and Tron, and continues to support ecosystem growth with a long-term, collaborative approach.

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This Bera supports this proposal