What Is the Potential Impact of High Token Volatility on the Effectiveness of Staking Collateral?

High token volatility can undermine the effectiveness of staking collateral. If the native token's value drops sharply, the financial cost of being slashed may no longer outweigh the potential profit from a malicious attack, especially for a high-value derivative contract.

Conversely, a sudden spike in token price could make the barrier to entry for new nodes prohibitively high, potentially leading to centralization. This volatility introduces risk to the network's economic security model.