Challenge Escalation

Challenging a challenge after the initial settlement is defined by the protocol as an escalation game. These recursive challenges are resolved in rounds with the CB needed to challenge the outcome increasing with each round. The escalation_exponent_base is a parameter that defines the base of the exponential increase, which can be altered by the Flux DAO with a minimal value of 1.1. Increasing or decreasing the escalation_exponent_base affects the exponentiality of the challenge bond.

The cost function of the challenge bond is as follows:

challengebond=settlementbondescalationexponentbase(round)challenge bond = settlement bond * escalation exponent base(round)

We can further illustrate the cost function by using the example of a challenge case for a settlement where the TVSr = 100 and the fee_percentage = 0.1%, arriving at:

round1=min(0.1/100100,30)20=30round1= min (0.1/100 * 100, 30) * 20=30

After the initial challenge, the CB required for subsequent round doubles with each round. However, escalation games are not meant to “overflow” and continue ad nauseam. Rather, there is a base case that will trigger a final arbitrator if hit.

Final Arbitrator

The Final Arbitrator decides the final outcome of the request. This arbitrator is triggered when the dispute bond of a market is equal to 2.5% of FLX total supply