To explain the concept of Protected Perps to Abhinav, I asked him:
Will he throw his phone from the office window if I asked him to?
He said no ofcourse.
I told him I'll pay him 20k to cover the cost of repairing his phone.
He still said no.
I told him I'll pay him the cost of his phone (60k) and replace it.
He said no.
I told him I'll pay him 2L to buy the best phone (latest iPhone 15 Maxx Pro with 256GB storage and apple care.).
He said yes.
Thru this thought experiment, we learnt that even if an outcome is bad (like throwing a phone), humans will accept it if paid a certain cost.
Here Abhinav's cost of accepting the payoff of throwing his phone was somewhere between 60k and 2L.
Similarly I argue that humans will do anything, if paid the right price.
Good or bad outcomes can be justified provided the right price is paid.
Going back to Protected Perps,
Similarly there is a price for LPs to accept the payoff of ETH's downside without the upside.
And that is the premium they charge the traders.
Everything has a price.