Proof-of-stake cryptocurrencies face systemic risk from their centralization on exchanges. Users are economically lured to store their PoS coins on exchanges, s

Proof-of-stake cryptocurrencies face systemic risk from their centralization on exchanges. Users are economically lured to store their PoS coins on exchanges, since they receive X% returns. The exchange then gains an outsized portion of the supply of such coins. Finally, the exchange -- or a few exchanges in a cartel arrangement -- are able to muster enough stake to change the rules of the coin to suit the whims of the exchange at the expense of network security, decentralization, etc. For instance, if regulators lean on the exchanges to require some form of KYC embedded in the coins themselves, they are able to oblige by suspending withdrawals until the new rules of the network are adopted through the PoS governance mechanism, voted on by the majority stake held by the exchange under regulatory scrutiny.