Definition ∞ Stake Concentration Risk describes the potential hazard where a disproportionately large amount of staked assets in a proof-of-stake network is controlled by a limited number of entities. This concentration can lead to undue influence over network governance, transaction validation, and censorship capabilities. It poses a threat to the decentralization and security of the blockchain. This risk undermines the core principles of distributed ledger technology.
Context ∞ Stake concentration risk is a persistent concern in crypto news, particularly when analyzing the decentralization of major proof-of-stake protocols. Discussions often involve the impact of large staking pools and institutional participation on validator distribution. Future developments aim to implement protocol-level mechanisms, such as sub-linear reward models, to mitigate this risk and promote a more equitable distribution of stake. This risk is central to debates about network health and resilience.
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