Proof of Stake
A blockchain consensus mechanism where validators lock up cryptocurrency as collateral to earn the right to validate transactions.
What is Proof of Stake?
Proof of stake (PoS) is a blockchain consensus mechanism in which validators are chosen to create new blocks and confirm transactions based on the amount of cryptocurrency they lock up (stake) as collateral, rather than through computational work. When a validator is selected — often through a pseudo-random process weighted by stake size — they propose the next block and earn transaction fees and staking rewards. If a validator acts dishonestly, their staked funds can be partially destroyed ('slashed'). Proof of stake consumes far less energy than proof of work because it does not require intensive computation. Ethereum transitioned from proof of work to proof of stake in September 2022 ('The Merge'), reducing its energy consumption by an estimated 99.9%. Many newer blockchains including Solana, Cardano, and Avalanche use variants of proof of stake.
Example
On Ethereum's proof-of-stake network, validators must deposit a minimum of 32 ETH to participate. They earn an annual yield of approximately 3–5% for validating blocks. If they try to cheat by signing conflicting blocks, a portion of their staked ETH is slashed — creating a strong economic disincentive for dishonest behavior.