Bank runs 2.0: Exploring the relationship between on-chain lending and staking

Cryptocurrency analysts and researchers often characterize the rapid emergence of blockchain-based Open Finance protocols as a positive development, a potential catalyst for ever-coveted mainstream adoption. 

While the rate of traction has been impressive, it remains to be seen whether these products can coexist with base layer networks in a symbiotic fashion: a recently published research paper by Gauntlet Network’s Tarun Chitra builds on previous work from Cornell’s Phil Daian, providing formal proofs indicating that, under certain monetary policies, Proof of Stake-based blockchains may be susceptible to debilitating stake-based ‘bank runs’.