[seanalltogether]

I still have trouble getting my head around proof of stake. I feel like it's akin walking into a bank to get a loan, and when they ask you for collateral, you give them the contract for the last loan they approved, and its just a room full of people doing this over and over.

Isn't having something like collateral or work that is external to the system a key part of keeping value in check?

[Donzo]

The collateral is your stake, in this case ethers.

If you engage in provably Byzantine actions, your stake can be slashed, burned, or otherwise sacrificed or redistributed.

There are Byzantine actions that one can take that are unprovable at this time AFAIK (IE: exploiting the data availability problem).