Q:

What are the major risks of Ethereum moving to Proof of Stake?

There has been discussion about the motivations and benefits of moving to Proof of Stake.  For a risk-benefit analysis of moving to Proof of Stake, what are the major risks?

A:

The biggest risk is, as in Proof-Of-Work, centralisation. Centralisation of staking power in the 'hands of few' with the very deep pockets. To mitigate this risk, Ethereum founders decided not to engage venture capital on the early stages (and hopefully on any stages). Another measure was to hopefully create a diverse enough initial distribution of Ether in a pre-sale.
In this blog post, published in the middle of the pre-sale, Vitalik Buterin tried to assess a 'fairness' of Ether distribution:
https://blog.ethereum.org/2014/08/08/ether-sale-a-statistical-overview/
Another risk, which the researchers of Casper Proof Of Stake are dealing with, is potential presence of 'stuck' scenarios in the protocol, meaning that in the absence of some other validators and some other conditions, the protocol cannot make any further progress on validating new blocks and the networks 'freezes' (also known as Ice Age). To mitigate (or potentially eliminate) this risk, formal verification of the protocol is required and this is one of the tasks of the researchers.
There are also concerns about the behaviour of the protocol in the case of network partition, potential competition between validators to the point of harming the network.

