Key Takeaways
PoS has so far eluded a comprehensive threat model that encompasses both Byzantine attacks from distributed systems and financial attacks that arise from the dual usage of the token as a means of payment and a Sybil resistance mechanism.
When the yield provided by these contracts is more attractive than the inflation rate provided from staking, stakers will tend to remove their staked tokens and lend them out, thus reducing network security.
This paper provides a simple stochastic model that describes how rational validators with varying risk preferences react to changes in staking and lending returns.
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