Risk Socialization

Different validators have different risk profiles. This is due to the fact that validators are independent, run different hardware and software configurations and are run by different teams with different experience and priorities. Therefore, 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. The effect of a slashing event may be fully hedged by sufficient decentralization across validators.
The outcome of 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.