Bootstrapping Challenges

The bootstrapping process is one of the most significant challenges faced by new proof-of-stake (PoS) decentralized systems. To establish a secure and functional system, these networks require a sufficiently large and distributed set of operators to validate and secure transactions. However, attracting and maintaining a robust validator set requires substantial resources, participants, and economic incentives—factors that are especially difficult for smaller or emerging PoS systems to achieve.

In their early stages, PoS systems are particularly vulnerable to centralization, collusion, and attacks due to insufficient validator participation. This creates a feedback loop that can spiral into a negative cycle: a drop in the price of the staked asset reduces the system’s CoC, weakening its security and prompting staker exits, further reducing the total value locked (TVL). The resulting decline in confidence worsens the price drop, leading, again, to a lower CoC, and a weaker and less secure network. Breaking out of this cycle is difficult for early-stage PoS systems, which often lack the resources and market presence to attract the validators necessary for robust security.