Risk Socialization

Similar to Reward Socialization above, given that validators are independent, run different hardware and software configurations and are run by different teams with different experience and priorities, the risk profile of each validator is different. In order to maintain fungibility, this risk must also be socialized. A slashing event for one Asset validator is therefore borne by all qAsset holders through a negative movement in the Asset:qAsset redemption rate. Given sufficient decentralization across validators, slashing events are hedged against.
The outcome of such a double-sign slash (5%) for an average (1% of managed supply) validator, will lead to a 0.05% reduction in the redemption rate; similarly, the same validator being jailed for downtime (0.1%) will lead to a 0.001% reduction in the rate. When a validator is tombstoned for a double-sign infraction, the protocol will, insofar as redelegation limitations permit, move the delegation to the validator that replaces it in the active validator set.