proof of stake

Proof of stake is a way to secure a blockchain not by burning electricity, but by putting money on the line. Instead of miners racing to solve puzzles, participants lock up some of the chain's own coins as a deposit, called a stake. The network then picks one of them to propose the next block, and others to check it. The right to add to the ledger is bought with a bond, not with brute-force computation.

The genius is in the penalty. A participant — here called a validator — only earns rewards while playing by the rules, and their staked deposit can be partly destroyed if they try to cheat, for example by approving two conflicting versions of history. This automatic punishment is called slashing. So honesty is the profitable choice and dishonesty literally costs the attacker their own money, which is what deters bad behavior without any energy-hungry puzzle.

Compared with proof of work, proof of stake aims for the same outcome — leaderless agreement that is expensive to subvert — at a tiny fraction of the energy cost, since validating a block is cheap once you hold a stake. Ethereum switched from proof of work to proof of stake in 2022, cutting its energy use by over ninety-nine percent. The security now rests on capital at risk rather than computing power consumed.