Proof of Stake
Proof of Stake is a blockchain consensus system where validators secure the network by staking coins.
✦ Key Insight
It is used by many modern blockchains because it can be more energy-efficient than mining.
✕ Common Misconceptions
Assuming staking is the same as a bank deposit. It has technical and market risks.
Detailed Explanation
How It Works
Validators are selected to confirm transactions based partly on the amount they stake and other protocol rules.
FAQs
Is proof of stake risk-free?
No. It includes price risk, validator risk, and protocol risk.
In Practice
Dig Deeper
Staking
The process of actively participating in transaction validation on a Proof-of-Stake (PoS) blockchain. Participants lock up (or 'stake') their cryptocurrency holdings to support network security and operations, earning rewards in return, similar to earning interest.
Node
A node is a computer or device that participates in a blockchain network by storing, sharing, validating, or relaying data.
Validator
A validator is a network participant in a Proof-of-Stake (PoS) blockchain that stakes cryptocurrency to propose, verify, and finalize new blocks of transactions, earning rewards for honest behavior and risking penalties (slashing) for misconduct.
Slashing
Slashing is a penalty applied to validators who break network rules or behave incorrectly.