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Staking is a problem because it pretends to offer risk-free returns while investing in extremely risky assets. Or just straight up fraud.

None of the staking schemes have adequately explained who's taking the other side of the trade. Who wants to borrow a token for a very high interest rate? So far the only examples are "people putting it into an even bigger fraud" and "people providing soon-to-be-worthless collateral".

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We might be talking about two different things here when using the term "staking".

I'm referring to coins that are staked by validators in a proof-of-stake chain. The "other side of the trade" is not someone borrowing the coins, but are the transaction fees on the chain and for some chains also the artificial inflation (due to newly created coins).

There is risk involved, but not traditional counterparty risk (when excluding the exchange itself), as nobody is "borrowing" the coins.

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