I understand this. I just said that this still leads to the right incentives in protecting your key (basically, proportionally invest more in security against attacks that could affect many validators as compared to only one).
It is annoying that the dominant strategy on detecting validator misbehaviour (in this case not protecting keys) would be blackmailing instead of reporting.
BTW, the game theory of this is actually interesting. Unless the blackmailer can actually make it credible that
- They will slash if not paid
- They will destroy the key and not slash if paid
then the incentives actually work out differently:
- The blackmailer – upon being paid whatever amount – has no incentive to actually destroy the key and thus should repeat the blackmail ad infinitum
- Since this is the case, the rational strategy for any victim is not to pay anything.
One way of doing this is enforcing it through a smart contract that the attacker funds, and that will burn the funds if a slashing is submitted despite paying the ransom. However, this is not very plausible as (a) the attacker would have to commit a lot of funds to this which could be frozen via a concerted hard fork (very plausible if >10% of validators have just been attacked) and (b) they would also expose their funds in case one of those validators gets slashed for another reason after paying the ransom.
So, the blackmailing might be much harder to execute than it is proposed here. At least I don’t see an easy way to do this.