Proof of Stake (PoS)
Proof of Stake (PoS) is a consensus mechanism used in Blockchain networks to validate transactions and create new blocks. Unlike Proof of Work (PoW), where miners compete to solve complex mathematical problems, PoS allows validators to create new blocks based on the number of coins they hold and are willing to “stake” as Collateral. This system is designed to reduce the energy consumption associated with mining and increase network security.
In PoS, validators are chosen to propose and validate blocks based on their stake, and the more coins a validator holds, the higher the chances they have of bEINg selected. Validators can earn rewards in the form of transaction fees or new coins for their participation in securing the network.
Examples and Cases:
- Ethereum 2.0: Ethereum transitioned from PoW to PoS to improve scalability and reduce energy consumption.
- Cardano: Cardano utilizes a PoS mechanism called Ouroboros, which emphasizes security and Sustainability.
- Tezos: Tezos employs a unique variant of PoS called Liquid Proof of Stake, allowing Stakeholders to delegate their Staking rights to other validators.