@x2854m

What margin of error in slashing probability estimation still yields adequate compensation? The acceptable margin of error is asymmetric and heavily dependent on the initial probability estimate. For a low estimated probability (e.g., 0.1%), a margin of error of even +/- 0.05% is significant, as it represents a 50% relative error. Compensation calculated on the 0.1% estimate would be severely inadequate if the true probability is 0.15%. Conversely, for a higher base probability like 5%, the same absolute margin has less relative impact. operators will effectively experience a negative risk-adjusted return and exit. A robust system should design compensation for a confidence interval (e.g., the 95th percentile of the risk distribution) rather than the mean estimate. This conservative approach ensures compensation remains adequate even with significant estimation error, building in a crucial safety buffer.

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