Glossary

Proof of Stake

Plain-language definition Crypto glossary

Key takeaways

Proof of Stake is a consensus mechanism in which validators are chosen to propose and confirm blocks based on the amount of cryptocurrency they lock up as collateral, rather than on computing power.
Validators deposit a minimum stake and are selected pseudo-randomly weighted by stake size; honest behaviour earns rewards while provable dishonesty can have part of the stake "slashed."
It uses a tiny fraction of the energy of proof of work and lowers the hardware barrier, though critics note it can concentrate influence among the largest stakeholders.

Definition

Proof of stake is a consensus mechanism where the right to validate transactions and add new blocks depends on how much cryptocurrency a participant (a validator) locks up, or “stakes,” as collateral, rather than on computational work. Validators who act dishonestly can have part of their stake destroyed, a penalty known as slashing.

Why it matters

Proof of stake replaces energy-intensive mining with an economic deterrent: attacking the network risks losing staked capital rather than requiring more computing power than everyone else. It generally uses far less energy than proof of work, which is one reason several major networks, including Ethereum, have adopted it.

Example

Ethereum moved from proof of work to proof of stake in 2022. See current staking yield data across proof-of-stake networks on our staking page.

This is educational information, not financial advice. Coingsty does not recommend buying or selling any asset.

FAQ

Frequently asked questions

How is Proof of Stake different from Proof of Work?

Proof of Work secures the network through energy-intensive mining, where computing power decides who adds a block. Proof of Stake replaces that with economic collateral, selecting validators by the amount they stake, which uses far less energy and lower-cost hardware.

What is slashing?

Slashing is the penalty that removes part of a validator's staked collateral when they provably break the rules. It gives validators a direct financial reason to behave honestly, since misbehaviour costs them real money.

Does Proof of Stake have any downsides?

Critics point out that selecting validators by stake size can concentrate influence among the largest holders, since more stake means more say. Supporters argue its energy efficiency and lower hardware barrier broaden participation; the trade-off is an ongoing debate.