I understand all that but what I don’t understand is what encourages more physical nodes with high quality bandwidth because it seems like if me and you both want to stake for PoS then we can even be better off sharing the same hardware and buying higher quality hardware than we could individually, and this is a sub-linear incentive which I would think would result in the physical hardware footprint significantly shrinking. Am I missing something?

Now you might say well isn’t that a good thing for less resources but without an incentive to decentralize physically won’t there be a risk of centralization and potentially catastrophic outcomes for the network?