Crypto glossary
Proof of stake (PoS)
Proof of stake (PoS) is a consensus mechanism in which validators lock up coins as collateral for the right to propose and confirm new blocks.
In proof of stake, the right to add blocks depends on how many coins a participant has committed, not on computing power. Validators deposit, or stake, tokens; the protocol selects them to propose blocks and asks others to attest that those blocks are valid. Honest work earns rewards paid in the network's native token.
Misbehavior is punished through slashing: a validator that signs conflicting blocks or tries to cheat loses part of its stake. Because it needs no energy-hungry mining hardware, Ethereum cut its energy consumption by more than 99% when it switched to PoS with The Merge in September 2022.
Solana, Cardano, Avalanche and most newer chains also use variants of PoS. Critics argue it can favor large holders and that staking through a few big exchanges or liquid staking providers concentrates power.
Example
To run its own Ethereum validator, a user must deposit 32 ETH; holders with less can join a staking pool or an exchange program and receive a share of the rewards.
