@ garlonicon
> I think that free market will settle this value somewhere in between

I hope so. Does Eltoo allow for that variable to be chosen by individual channels? I didn't think so. I think that probably the right penalty is to pay the cost of all required on-chain transactions. Eg for Eltoo, this would be the cost of 2 transactions (the cheating transaction and the revoke transaction). It makes sense for the malicious/confused party to pay for the damages. Much more beyond that is excessive, anything less than that isn't fair to the victim.