PoS (Proof of Stake)
In short: Proof of Stake (PoS) is a consensus mechanism based on staking. Participants lock up the network’s coins as collateral for the right to validate…
Proof of Stake (PoS) is a consensus mechanism based on staking. Participants lock up the network’s coins as collateral for the right to validate transactions and produce new blocks, and those with more at stake are generally selected more often.
Why it matters
PoS secures a blockchain with economic value instead of computing power, so it uses far less energy than proof of work. Validators that follow the rules earn rewards, while those that act dishonestly, for example by signing conflicting blocks, can lose part of their stake through a penalty called slashing. Ethereum moved from proof of work to proof of stake, and many newer networks use PoS or a variant of it. Holders who do not run a validator can often delegate their coins or stake through a service instead.
Example
A user stakes coins, either by running a validator or by delegating to one. For each new block, the protocol selects a validator, weighted by stake, to propose it, while other validators check the block and vote on it. Once enough of the total stake approves, the block is finalized and the participating validators share the rewards. A validator that goes offline earns less, and one that breaks the rules can be penalized.