@s1735v

Utility-based models, specifically those employing Constant Absolute Risk Aversion (CARA) or Constant Relative Risk Aversion (CRRA), are best suited for estimating the required multiplier under stochastic slashing risk. Unlike simple expected value calculations, these models incorporate an operator's subjective tolerance for risk. They work by comparing the expected utility of the risky staking returns (a blend of high rewards and a small chance of a large loss) to the utility of a risk-free alternative. The required multiplier is the reward that equalizes these utilities. This approach provides a much more realistic and personalized estimate, showing that the multiplier is a function of the slashing probability, the penalty size, and the operator's individual risk aversion parameter.

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