This article compares Proof-of-Stake consensus models with Stellar's Consensus Protocol (SCP), arguing that PoS networks create structural incentives for MEV extraction and validator misconduct, while Stellar's explicit trust model and revocable authority provide better protection for regulated asset issuers.
The article examines why staking economics in PoS networks create operational risks for asset issuers, using a $733,000 sandwich attack as a case study. It explains how PoS validators have economic incentives to extract MEV through transaction reordering and front-running, despite these actions being technically valid under protocol rules. The author contrasts this with Stellar's Consensus Protocol, which uses explicit, chosen trust relationships rather than stake-weighted authority. On Stellar, validators are known entities (issuers, anchors, exchanges), trust is transparent and revocable, there are no staking rewards creating extraction incentives, and transaction ordering is randomized. The article argues this model better serves regulated institutions requiring predictable settlement, clear accountability, and the ability to remove misbehaving validators without network forks.
