Proof of Stake

What is Proof of Stake?

Proof of Stake (PoS) is a consensus mechanism used by blockchain networks to validate transactions, secure the ledger, and create new blocks in a decentralized manner. Unlike Proof of Work (PoW), which relies on energy-intensive computational mining, PoS assigns validation power based on the amount of cryptocurrency a participant holds and is willing to “stake” as collateral. The more coins a participant locks into the network, the higher the likelihood they will be chosen to propose and validate the next block, earning rewards in return.

This method dramatically reduces energy consumption and hardware requirements, making PoS a more environmentally sustainable and cost-effective alternative to PoW. Validators are expected to act in the best interest of the network, as malicious behavior can result in the loss of their staked assets through a process called “slashing”. This economic penalty creates strong incentives for honest participation and deters fraud.

PoS also enables faster transaction processing and greater scalability, addressing limitations found in earlier blockchain systems. As a result, many modern networks - such as Ethereum (after its transition to Ethereum 2.0), Cardano, Polkadot, Tezos, and Solana - have adopted PoS or adapted forms of it. These platforms use PoS to support decentralized applications, smart contracts, and global payment systems, contributing to a more efficient and accessible blockchain ecosystem.