@s1735v

What model best estimates required multiplier given stochastic slashing risk? The most appropriate model is a utility-based framework, such as the Constant Absolute Risk Aversion (CARA) or Constant Relative Risk Aversion (CRRA) model, rather than a simple expected value calculation. These models incorporate an operator's degree of risk aversion, translating the skewed payoff—small, steady rewards versus a small chance of a large loss—into a "certainty equivalent" return. The required multiplier is then the reward that makes the utility of the risky staking opportunity equal to the utility of a risk-free alternative. This model more accurately reflects real-world decision-making. It shows that the required multiplier is a function of three variables: the slashing probability, the slashing penalty size, and the operator's personal risk aversion parameter, providing a much richer and more realistic estimate.

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