Hey there!
I really appretiate @chainproof for flexible approach and precisely formulated proposal.
Want to share my view on new option, expanding a bit approach i used in a comment above.
Coverage
In terms of coverage new option (in my opinion) is enough for most realistic catastrophic incidents: 1550 ETH is well enough to cover slashings of all validators (1378 ETH initial + attestation penalties)
For minor / medium incidents with 10% deductable risks are not covered.
With 1.075 ETH per slashed validator in initial + attestation penalties, incidents for 144 Validators or less are not covered
Premium
- Risk-event mitigated: slashing of > 144 validators through a year
- Impact covered: 155 - 1550 ETH
- Premium: 55 ETH
Excepcted (statistically) impact could be valuated as
(probability of >144 slashings) X E(Impact | >144slashing), where
-First component is probability of risk-event
-Second is conditional expected value of random variable - Impact
Even in most extreme case: for second component valuated at it’s maximum value (1550 ETH)
Risk-neutral probability valuation of risk-event would be: 1550 / 55 = 3.55%
From module sustainability perspective, for 41k staked ETH and assumption on 4% APR total rewards
Total rewards for module (1 year) = 1 640 ETH
Cost of risk = 55/ 1640 = 3.35%
While relatively high premium value is perfectly reasonable in terms of high level of uncertainty, as DVT module is definitely
unknown unknowns, due to the new codebase which hasn’t been battle tested like the current, trusted Lido staking module
The level of uncertainty is expected to drastically drop: with extensive testnet trials and, finally, starting operation on mainnet.
Therefore, for me, at this point in time those probability estimations could be reasonable, but for a first starting months.
In terms of 1 year risk mitigation strategy it’s still preferable to use the existing cover fund.
Thank you for a constructive and insightful discussion.