Proof of Stake (PoS)

Proof of stake replaces computational work with financial commitment. Validators deposit, or stake, a quantity of the chain's native coin. The protocol selects validators to propose and attest to blocks, roughly in proportion to how much they have staked. Honest validators earn rewards from new issuance and fees. Validators who sign conflicting blocks or go offline can have part of their stake destroyed, a penalty called slashing.

Ethereum switched to proof of stake in September 2022, cutting its energy use by an estimated 99.95 percent. A solo Ethereum validator requires 32 ETH. Smaller holders can stake through pools or liquid staking services like Lido, which issue a token representing the staked position. Solana, Cardano, Avalanche, Polkadot, and most other major chains launched with proof of stake from the start.

Attacking proof of stake requires acquiring a large share of all staked coins, which would be extremely expensive and would be slashed on detection. Critics argue that it favors existing large holders and that staking concentration in a few services creates centralization risk. Proponents point to lower cost, faster finality, and reduced environmental impact.