Economics and Incentives

The economic utility of a PoS token is twofold: staking and transactional. The transactional utility of the token increases liquidity and generates a less incentive to stake since token owners tend to hold their tokens over time to increase it's valuation (Source).

Greater liquidity also results in weaker network security. Potential attackers with high initial stake can stealthily accrue the amount of tokens necessary to attack a Proof-of-Stake system.

This is the problem of the "richest get richer" in PoS.

// B@B paper

In a paper by the R&D departmenf of Blockchain at Berkeley, Krishnan et al. (2018) conclude that "there is a non-zero probability of a validator obtaining 1/3 stake when intentionally trying to do so, which"

So in the case of a PoS blockchain with a fixed supply of the staked token, any wealthy validator in the network can accumulate additional tokens, "reducing the network's ability to bond more tokens in order to dilute their stake" (Krishnan et al., 2018, p.7) and thus preventing a 1/3 attack.

Krishnan, A, 2018 An Exploration of 33.3% Attack Vectors in Pure Proof of Stake

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