Efficiency vs Resilience: Optimal Collateral in Proof of Stake Blockchains

Abstract

Proof-of-stake networks implement incentive-compatible transaction verification by requiring validators to post collateral, or stake, that can be forfeited upon failure. While the resilience of these networks rests on decentralization, validation activity is increasingly delegated to few professional operators. Motivated by the September 2025 Kiln security incident, where professional-but not solo-validators experienced a sharp decline in effectiveness, we develop a model of delegated validation. Delegation expands access by pooling collateral and lowering the operational burden borne by individual validators, and can improve efficiency through professional expertise and scale. At the same time, delegated validation concentrates operational infrastructure, increasing exposure to common shocks. The protocol therefore faces a tradeoff: tighter collateral requirements strengthen discipline, but can shift activity toward intermediated providers, raising concentration and correlated losses in stress states. Liquid staking tokens amplify this tradeoff by adding private liquidity and collateral-use benefits to delegation, and can move the system from a low-delegation equilibrium to a self-sustaining high-delegation equilibrium. Anti-correlation penalties mitigate this force by pricing correlated failures more directly and can reduce reliance on high collateral requirements.