Currently, the system is that each wrong submission leads to a fixed penalty of 50 points irrespective of the maximum points available for a problem. This means that for each wrong submission, one can lose as much as 20% of the points for a problem notionally rated 250 and only 2% of the points for a problem rated 2500. I am not sure if this fixed penalty system is a good system.

Perhaphs a proportional penalty system would be better where each wrong submission leads to a 4% penalty. This would mean that a 250-rated problem generates a 10 point penalty for a wrong submission and a 2500-rated problem generates a 100 point penalty.

Such a proportional penalty system would also be consistent with a time penalty which for most competitions works as 0.4% penalty per minutes. Therefore a 4% penalty for a wrong submission will translate to a 10-minute time penalty, which is what we use for ICPC style contests on codeforces.