Proof of Stake (PoS)

PoS — the standard abbreviation — replaces the energy-intensive puzzle-solving of Proof of Work with a different kind of skin-in-the-game. Participants called validators deposit ("stake") a specified minimum amount of the network's own coin as collateral. The protocol then selects among them — typically weighted by stake size, often with additional randomness — to propose and confirm the next block of transactions. If a validator behaves dishonestly, the network can automatically destroy part of their stake, a penalty known as "slashing."

Ethereum's 2022 shift from PoW to PoS — an event called "The Merge" — is the highest-profile real-world example of a major network changing consensus mechanisms. Proponents argue PoS requires far less energy than PoW; critics argue that concentrating validation rights among large stakeholders can create centralisation risks. Both points are part of ongoing technical and economic debate rather than settled conclusions.

A frequent point of confusion is thinking PoS validators "earn interest" the same way a savings account does. The yield validators receive comes from newly issued coins and transaction fees paid by network users — not from a bank lending out deposits. The economics of that yield are explained in the staking entry, and the broader landscape of consensus mechanisms sits within the blockchain explained guide.