Definition
Proof of Stake selects validators based on the amount of cryptocurrency they stake (lock up as collateral). Validators are chosen pseudo-randomly, with higher stakes increasing selection probability. If validators approve fraudulent transactions, their stake is "slashed" (partially destroyed). PoS uses 99%+ less energy than PoW while maintaining security through economic incentives.
lightbulb Example
An Ethereum validator stakes 32 ETH (~$100K) and runs validation software. They earn ~4-5% annual yield for honestly validating transactions. Dishonest behavior triggers slashing—losing a portion of the staked ETH.
verified_user Key Points
- Validators stake crypto as collateral
- 99%+ less energy than Proof of Work
- Slashing penalizes dishonest validators
- Ethereum transitioned from PoW to PoS in 2022