How does Betoken punish huge manager’s losses

A manager’s investments with losses below 10% will lose the normal amount of Kairo, whereas investments with more than 10% losses will lose a lot more Kairo as the losses increase. Investments with losses above 25% will lose all of the staked Kairo, causing a -100% KRO to redeem.

Why should I redeem DAI from a -100% position?

TL;DR: as a manager, you may have noticed an active position with a KRO to redeem balance displaying -100% on your dashboard. That doesn’t imply there is no value still locked in it.

If you redeem the DAI from a -100% position, then you protect Betoken from further losses. By doing so, you protect your own manager's commissions.