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How do LST supply elasticities influence restaking collapse risk? LST supply elasticity—the ease with which it can be minted or redeemed—profoundly influences collapse risk. An LST with instant minting but a delayed redemption (like stETH) creates a dangerous asymmetry. During a bull market, supply can expand rapidly, fueling leverage. During a panic, however, the redemption delay acts as a valve that is stuck closed. The supply cannot contract quickly enough to meet demand for exits, so the price must fall drastically below the NAV to clear the market. This inelastic supply on the way down turns a sell-off into a crash. A more elastic supply, with faster redemptions, would allow for a more orderly contraction of the system.

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