Proof-of-Stake Under Fire: Why Stellar’s Proof-of-Agreement Offers a Safer Alternative

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• Proof-of-Stake is vulnerable to MEV exploits, anonymous validator attacks, and even geopolitical interference, as shown by Ethereum’s $25M exploit.
• Stellar’s Proof-of-Agreement relies on trust and reputation rather than token stake, making it harder for malicious or irrational actors to infiltrate.
• PoA prioritizes transparency and accountability, reducing censorship and MEV risks, and offering a more resilient model for critical financial infrastructure.

As blockchain technology continues to evolve, consensus mechanisms—the rules that keep decentralized networks honest—have become a central point of debate. Proof-of-Stake (PoS) has emerged as the dominant alternative to Proof-of-Work (PoW), powering major networks like Ethereum, Solana, and Cardano.

But recent incidents and structural weaknesses raise an urgent question: Is PoS truly secure, or is it vulnerable to both opportunistic and geopolitical attacks? The Stellar network, which uses a different model known as Proof-of-Agreement (PoA), argues the latter—and positions itself as a safer, reputation-based alternative.

PoS Validators: Power Without Oversight

In PoS networks, validators are randomly selected to propose and confirm blocks. The selected “leader” has full control over transaction ordering in their block—able to insert, censor, or reorder transactions as they please.

If a validator acts maliciously, the protocol can “slash” their staked funds. But this deterrent only works if the potential penalty outweighs the potential reward.

The weakness of this assumption was exposed in 2023, when attackers exploited Ethereum’s MEV-Boost relay, walking away with $25 million in stablecoins while losing just $10,000 worth of staked ETH. The attack block was technically valid, so Ethereum executed the transactions. By the time the attacker’s stake was slashed, the stolen funds were long gone.

This imbalance shows that PoS’s security model can crumble when illicit gains outpace the cost of slashing. Even U.S. prosecutors acknowledged that such exploits “call the very integrity of the blockchain into question.”

The Geopolitical Threat to PoS

PoS also assumes validators are rational, profit-seeking actors. But what if attackers are not motivated by profit at all?

A hostile state actor could amass stake—or compromise validators—not to earn rewards, but to disrupt financial infrastructure. Imagine if a U.S. settlement system ran on PoS: an adversary might burn billions in losses just to halt or censor transactions, gaining geopolitical leverage in the process.

The rise of staking pools and liquid staking platforms like Lido, which controls ~27% of staked ETH, only amplifies the risk. Concentration of stake makes coordinated attacks easier, whether profit-driven or political.

Anonymous Validators: PoS’s Core Weakness

The underlying issue is that PoS grants block production rights to anyone with enough money. Validators are anonymous addresses with no identity or accountability.

This allows:

• Censorship – Validators may exclude transactions indefinitely if enough collude.
• MEV exploitation – Validators reorder or insert transactions for profit, creating “invisible taxes” on users.
• Governance manipulation – Wealthy actors can register multiple validator identities (Sybil attacks) to sway protocol votes.

As the Ethereum MEV exploit showed, once an attacker is inside the validator set, damage is often irreversible.

Also Read: Stellar Joins ERC-3643 Association, Boosting RWA Tokenization Potential for Pi Network

Stellar’s Proof-of-Agreement: A Reputation-Based Model

The Stellar Development Foundation (SDF) takes a different path with its Proof-of-Agreement (PoA), implemented via the Stellar Consensus Protocol.

Instead of staking tokens, validators must earn trust from existing network participants. Each Stellar validator chooses a list of trusted peers. Consensus is reached only when overlapping trust groups agree.

This means:

• A new validator cannot simply buy their way in; they must convince established participants to trust them.
• Anonymous attackers can spin up nodes, but without trust, their votes are ignored.
• Influence is gained through reputation and reliability, not raw capital.

In practice, Stellar’s validator set includes known companies, fintech firms, and exchanges. Their real-world identities and reputations serve as built-in deterrents against malicious behavior.

Why PoA Is More Resilient

1. Minimal MEV risk – Stellar validators earn no block rewards, removing incentives to manipulate transactions. Ordering is randomized through consensus, neutralizing front-running.
2. Censorship resistance – A single validator cannot block transactions. If one refuses, others in its quorum include it. Collusion would require visible, reputationally costly coordination.
3. Defense against irrational attacks – A hostile actor cannot simply buy stake to attack. They must infiltrate a social trust network, a much harder task than acquiring tokens.
4. Transparent accountability – Validators are often public organizations. Malicious behavior would be immediately noticed and could result in peers cutting them out of consensus—a punishment harsher than slashing.

The Broader Lesson: Blockchains Still Rely on Trust

Critics might argue PoA introduces subjectivity. But in practice, all blockchains rely on social trust. Ethereum forked after the DAO hack in 2016. Delegated staking relies on “trusted” operators. Stablecoins depend on trust in issuers’ reserves.

PoA makes this trust explicit, rather than hiding it behind the illusion of anonymous neutrality. By prioritizing identity and reputation over stake, Stellar sidesteps many of the structural weaknesses now plaguing PoS.

Conclusion: PoA as a Model for the Future

The rise of PoS has brought scalability and energy efficiency, but also significant vulnerabilities. Economic incentives can be gamed, anonymous validators can infiltrate networks, and geopolitical threats loom large.

Stellar’s Proof-of-Agreement offers a compelling alternative: a system where trust, transparency, and reputation are the foundation of consensus. While no model is perfect, PoA raises the bar for attackers and may prove more resilient as blockchains scale into critical financial infrastructure.

As governments, banks, and enterprises explore blockchain adoption, the question is no longer just “Can it scale?” but also “Can it survive attacks from actors who don’t play by economic rules?” On that front, Stellar may have an answer PoS cannot match.

Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses