Thanks for this very thorough response!
As I’ve mentioned, I’m supportive of using multiple liquid staking providers for this initiative. So long as it can be done securely. However, I still think Persistence’ economic security is much too low for the 10M DYDX deposit proposed here.
I love that Persistence is planning on diversifying its security. However, I don’t think any of these other security sources are currently live. So until they are live, I think we should just focus on Persistence’ current economic security today.
Persistence has about $60M of economic security, and a TVL of roughly $15. A 10M DYDX deposit would increase TVL by roughly 3x, pushing it very close to the level of economic security. Then, if the price of XPRT declined and the price of DYDX increased, TVL could easily greatly exceed economic security.
For an attack to occur, an attacker wouldn’t have to acquire 67% of staked XPRT by buying it on the market. Existing validators and XPRT holders could conspire to attack the chain, or an attacker might buy validator keys, or some XPRT might also be bought from the market. In reality, it would probably be a combination of these three things.
This is a serious issue. In my view, you can’t just say “it’s improbable,” or “DYDX is staked anyway, so attackers would have a hard time getting it.” With this kind of thing, you shouldn’t create preserve incentives and then say “let’s hope for the best.”
The point is, by increasing Persistence TVL by 3x with a single deposit and pushing TVL very close to the level of economic security, it creates preserve incentives. In my view, it’s too big of a risk.