How Does the Centralization Risk in PoS Staking Pools Affect Its Network Effect?

Staking pools aggregate the tokens of many users, and if a few pools control a large majority of the staked tokens, it introduces centralization risk. This concentration undermines the core value proposition of decentralization.

This risk can deter users and developers who prioritize censorship resistance, negatively impacting the network effect by reducing the perceived security and trustworthiness of the consensus mechanism.