> the more people that stake, the smaller the reward
In PoW reward is proportional to normalized "work". Reward is proportional to normalized amount staked. This very directly leads to wealth concentration.
In PoW, the "work" is just how much money the miner spends on mining hardware and electricity. Both PoW and PoS are cases where people with money invest that money and get a proportional reward. PoS just cuts out the hardware and electricity waste.