Unfortunately ELO would probably be one of the worst possible systems for this game. ELO is a pure performance metric and there have been questions of the appropriateness of it’s use in games that have luck as a factor.
At it’s core ELO says that two players of the same ranking should be able to win against the other 50% of the time. However, most PVP invades in this game have a win percentage of closer to 75% (or possibly higher), regardless of the skill level of the players involved.
Two of the main concerns ELO would bring would be in activity vs protecting rating, and selective pairing.
With ELO you can’t lose points if you don’t play (in theory at least), so it can discourage people from playing after they achieve a certain rank. In fact it can in theory punish those who play more, and reward people who go on short quick hot streaks as a result. Now I know you suggested having people lose points in failing to defend… however as we’ve already mention, the win ratio for invades is around 75% or higher. So people would be losing those A LOT, and would be forcing people to play a lot. So, as you said, this isn’t really a very casual friendly system.
The other issue is with selective pairing. The PVP system in this game allows you to choose your opponents, and as such people can focus on “safer” wins to maximize their rating gain. Now there are some ways to account for this, but in the end people will still likely be able to game the system, and it will reward people who can play more, rather than those who are more skillful (assuming that everyone takes the best rating maximizing matches the can, those who play more will get more points).
It’s also worth noting that games such as Magic: The Gathering and the Pokemon TCG have used ELO in the past. MTG have abandoned it completely and Pokemon TCG do still use it, but there seems to be a mix with Championship Points as well. Online games such as World of Warcraft, and League of Legends have used ELO in the past, but both have abandoned it for their own in house systems.
So while the idea of ELO is nice, we’d more likely be better off with a system devised by InfinityPlus2 for their own game than actually using ELO.
More info on ELO here if anyone is interested: https://en.wikipedia.org/wiki/Elo_rating_system