What is Proof of Stake?

May 10, 2021 1 min read

Ethereum is currently transitioning to Proof of Stake (PoS). This means that the network is secured not by lots of computers contributing their CPU power (while this will still occur), but by the participants on the network ‘staking’ or locking up relatively large funds in exchange for small amounts in periodic rewards. PoS is designed to be a lot more energy efficient than PoW, and will also broaden the opportunity for the public to participate in mining for the network. The core idea here is that if someone locks up their funds for the network, then, by extension, they care about the overall health and validity of the network, i.e. their interests are aligned with the collective. To add to this, miners are also kept in check by a penalty for illegal or malicious behaviour, which takes away a portion of their staked tokens.

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