@g5179h

When the slashing probability doubles, the reward multiplier must more than double to maintain the same level of operator participation and utility. In a risk-neutral model, a doubling of probability from p to 2p would require the reward to double from R to 2R to keep the expected value constant. However, operators are risk-averse. A higher probability of a ruinous event makes the investment significantly less attractive, increasing the perceived variance and requiring an additional compensatory premium, δ. Thus, the new reward should be 2R + δ. The value of δ increases with the base probability and the degree of operator risk aversion, ensuring the utility of staking remains competitive with safer alternatives.

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