Researchers from the Cardano Foundation and Input Output Global presented a paper titled 'Reserve Depletion and Security Runway in Proof-of-Stake Systems' at the 8th Conference on Advances in Financial Technologies (AFT 2026). The event took place in London from October 6 to 9, 2026, with the paper appearing in the LIPIcs proceedings on October 2, 2026.
The study introduces a state-dependent reserve threshold to evaluate network security. This model categorizes proof-of-stake systems into three states: complete failure, reserve-dependent security, and fee-only security. The authors utilized discrete-time stochastic methods to account for market volatility and uncertainty in key variables.
The research highlights that large token reserves do not inherently guarantee long-term security. The authors note that Cardano currently draws 0.3% of its remaining reserves each epoch for rewards, meaning the absolute value of withdrawals decreases as the reserve pool shrinks.
The findings suggest that investors should look beyond total reserve size. The study emphasizes that the adequacy of reserves relative to security needs and the specific mechanics of reward disbursement are critical factors for network stability.
