What Is Proof-of-stake?

Proof-of-stake (PoS) is a blockchain consensus mechanism where validators are selected to propose and validate new blocks based on the amount of cryptocurrency they stake as collateral. Validators earn rewards from newly minted tokens and transaction fees for honest participation, but face “slashing” penalties if they act maliciously or go offline. Ethereum transitioned from proof-of-work to proof-of-stake in September 2022 (“The Merge”), reducing energy consumption by over 99%. Proof-of-stake enables staking as a passive income strategy and forms the economic security foundation for decentralised finance applications built on top.

See also

• Staking

• Ethereum

• Ether

• Blockchain

• Decentralised finance

• Real yield

• Trading strategy