spec updates

docs/spec/README.md

@@ -5,15 +5,14 @@ the Cosmos Hub.
 
 NOTE: the specifications are not yet complete and very much a work in progress.
 
-- [Basecoin](basecoin) - Cosmos SDK related specifications and transactions for
-  sending tokens.
-- [Governance](governance) - Governance related specifications including 
-  proposals and voting.
-- [IBC](ibc) - Specification of the Cosmos inter-blockchain communication (IBC) protocol.
-- [Staking](staking) - Proof-of-stake related specifications including bonding 
-  and delegation transactions, inflation, etc.
-- [Slashing](slashing) - Specifications of validator punishment mechanisms
-- [Provisioning](provisioning) - Fee distribution, and atom provision distribution specification
+- [Store](store) - The core Merkle store that holds the state.
+- [Auth](auth) - The structure and authnentication of accounts and transactions.
+- [Bank](bank) - Sending tokens.
+- [Governance](governance) - Proposals and voting.
+- [IBC](ibc) - Inter-Blockchain Communication (IBC) protocol.
+- [Staking](staking) - Proof-of-stake bonding, delegation, etc.
+- [Slashing](slashing) - Validator punishment mechanisms.
+- [Provisioning](provisioning) - Fee distribution, and atom provision distribution 
 - [Other](other) - Other components of the Cosmos Hub, including the reserve 
   pool, All in Bits vesting, etc.
 

docs/spec/slashing/end_block.md

@@ -0,0 +1,102 @@
+# End-Block 
+
+## Slashing
+
+Tendermint blocks can include
+[Evidence](https://github.com/tendermint/tendermint/blob/develop/docs/spec/blockchain/blockchain.md#evidence), which indicates that a validator
+committed malicious behaviour. The relevant information is forwarded to the
+application as [ABCI
+Evidence](https://github.com/tendermint/abci/blob/develop/types/types.proto#L259), so the validator an be accordingly punished.
+
+For some `evidence` to be valid, it must satisfy: 
+
+`evidence.Timestamp >= block.Timestamp - MAX_EVIDENCE_AGE`
+
+where `evidence.Timestamp` is the timestamp in the block at height
+`evidence.Height` and `block.Timestamp` is the current block timestamp.
+
+If valid evidence is included in a block, the validator's stake is reduced by `SLASH_PROPORTION` of 
+what their stake was when the equivocation occurred (rather than when the evidence was discovered):
+
+```
+curVal := validator
+oldVal := loadValidator(evidence.Height, evidence.Address)
+
+slashAmount := SLASH_PROPORTION * oldVal.Shares
+
+curVal.Shares = max(0, curVal.Shares - slashAmount)
+```
+
+This ensures that offending validators are punished the same amount whether they
+act as a single validator with X stake or as N validators with collectively X
+stake.
+
+We also need to loop through the unbondings and redelegations to slash them as
+well:
+
+```
+unbondings := getUnbondings(validator.Address)
+for unbond in unbondings {
+    if was not bonded before evidence.Height {
+        continue
+    }
+    unbond.InitialTokens
+    burn := unbond.InitialTokens * SLASH_PROPORTION
+    unbond.Tokens = max(0, unbond.Tokens - burn)
+}
+
+// only care if source gets slashed because we're already bonded to destination
+// so if destination validator gets slashed our delegation just has same shares
+// of smaller pool.
+redels := getRedelegationsBySource(validator.Address)
+for redel in redels {
+
+    if was not bonded before evidence.Height {
+        continue
+    }
+
+    burn := redel.InitialTokens * SLASH_PROPORTION
+
+    amount := unbondFromValidator(redel.Destination, burn)
+    destroy(amount)
+}
+```
+
+## Automatic Unbonding
+
+At the beginning of each block, we update the signing info for each validator and check if they should be automatically unbonded:
+
+```
+height := block.Height
+
+for val in block.Validators:
+  signInfo = SigningInfo.Get(val.Address)
+  if signInfo == nil{
+        signInfo.StartHeight = height
+  }
+
+  index := signInfo.IndexOffset % SIGNED_BLOCKS_WINDOW
+  signInfo.IndexOffset++
+  previous = SigningBitArray.Get(val.Address, index)
+
+  // update counter if array has changed
+  if previous and val in block.AbsentValidators:
+    SigningBitArray.Set(val.Address, index, false)
+    signInfo.SignedBlocksCounter--
+  else if !previous and val not in block.AbsentValidators:
+    SigningBitArray.Set(val.Address, index, true)
+    signInfo.SignedBlocksCounter++
+  // else previous == val not in block.AbsentValidators, no change
+
+  // validator must be active for at least SIGNED_BLOCKS_WINDOW
+  // before they can be automatically unbonded for failing to be 
+  // included in 50% of the recent LastCommits
+  minHeight = signInfo.StartHeight + SIGNED_BLOCKS_WINDOW
+  minSigned = SIGNED_BLOCKS_WINDOW / 2
+  if height > minHeight AND signInfo.SignedBlocksCounter < minSigned:
+    signInfo.JailedUntil = block.Time + DOWNTIME_UNBOND_DURATION
+
+    slash & unbond the validator
+
+  SigningInfo.Set(val.Address, signInfo)
+```

docs/spec/slashing/state.md

@@ -0,0 +1,51 @@
+## State
+
+### Signing Info
+
+Every block includes a set of precommits by the validators for the previous block, 
+known as the LastCommit. A LastCommit is valid so long as it contains precommits from +2/3 of voting power.
+
+Proposers are incentivized to include precommits from all
+validators in the LastCommit by receiving additional fees
+proportional to the difference between the voting power included in the
+LastCommit and +2/3 (see [TODO](https://github.com/cosmos/cosmos-sdk/issues/967)).
+
+Validators are penalized for failing to be included in the LastCommit for some
+number of blocks by being automatically unbonded.
+
+Information about validator activity is tracked in a `ValidatorSigningInfo`. 
+It is indexed in the store as follows:
+
+- SigningInfo: ` 0x01 | ValTendermintAddr -> amino(valSigningInfo)`
+- SigningBitArray: ` 0x02 | ValTendermintAddr | LittleEndianUint64(signArrayIndex) -> VarInt(didSign)`
+
+The first map allows us to easily lookup the recent signing info for a
+validator, according to the Tendermint validator address. The second map acts as
+a bit-array of size `SIGNED_BLOCKS_WINDOW` that tells us if the validator signed for a given index in the bit-array.
+
+The index in the bit-array is given as little endian uint64.
+
+The result is a `varint` that takes on `0` or `1`, where `0` indicates the
+validator did not sign the corresponding block, and `1` indicates they did.
+
+Note that the SigningBitArray is not explicitly initialized up-front. Keys are
+added as we progress through the first `SIGNED_BLOCKS_WINDOW` blocks for a newly
+bonded validator.
+
+The information stored for tracking validator liveness is as follows:
+
+```go
+type ValidatorSigningInfo struct {
+  StartHeight           int64
+  IndexOffset           int64
+  JailedUntil           int64
+  SignedBlocksCounter   int64
+}
+
+```
+
+Where:
+* `StartHeight` is set to the height that the candidate became an active validator (with non-zero voting power).
+* `IndexOffset` is incremented each time the candidate was a bonded validator in a block (and may have signed a precommit or not).
+* `JailedUntil` is set whenever the candidate is revoked due to downtime
+* `SignedBlocksCounter` is a counter kept to avoid unnecessary array reads. `SignedBlocksBitArray.Sum() == SignedBlocksCounter` always.