What is Proof-Of-Stake ?
Proof of stake (PoS) is an approach used in the cryptocurrency industry to help validate transactions.
With proof of stake, participants referred to as “validators” lock up set amounts of cryptocurrency or crypto tokens—their stake, as it were—in a smart contract on the blockchain. In exchange, they get a chance to validate new transactions and earn a reward. But if they improperly validate bad or fraudulent data, they may lose some or all of their stake as a penalty.
Proof-Of-Stake consensus algorithm is based on randomly selecting a validator to verify the block and add that onto the blockchain. In order to guarantee validators does not perform false blocks, an amount is paid by the validator as stake.
If the validator misbehaves, this stake is diluted and this event is called slashing.
When the validator successfully verifies the block, they are rewarded with the native token of the blockchain they are running a node on.
Cryptocurrencies Using Proof of Stake
Networks using proof of stake are easy to find among the cryptocurrency landscape. Here’s a list of several popular platforms using a proof of stake validation method:
Cardano
Avalache
Ethereum
Algorand
Nxt
Cosmos
ThorChain
Polkadot
Pros and Cons of Proof of Stake
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