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How do LST supply elasticities influence restaking collapse risk? LST supply elasticity—the ease with which new tokens can be minted or redeemed—profoundly influences collapse risk. An inelastic supply (e.g., due to long unbonding periods or minting caps) creates a dangerous scenario during a panic. If demand crashes, the price can free-fall because the supply cannot quickly contract to meet the new equilibrium. This is the de-peg scenario. A more elastic supply, where redemption is quick and frictionless, allows supply to shrink rapidly as users exit, helping to stabilize the price closer to NAV. Therefore, LSTs with rigid, slow redemption mechanisms inherently carry higher collapse risk in a crisis, as they cannot efficiently arbitrage their own de-peg, turning a sell-off into a rout.

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