In one sentence
Proof of stake is a consensus method in which participants lock up the network's own units as a deposit, take turns proposing and voting on blocks, and can lose part of that deposit if they break the rules.
How it works
Instead of spending electricity to compete, participants — called validators — put up a deposit that stays locked while they take part. On Ethereum, which switched to proof of stake on 15 September 2022 in an upgrade known as the Merge, the minimum deposit to activate a validator is 32 ether.
Ethereum divides time into slots of 12 seconds and epochs of 32 slots. For each slot, the protocol picks one validator, in a way that is pseudo-random but verifiable, to propose a block. Committees of other validators then "attest": they vote on which block they consider the head of the chain and on checkpoints used for finality.
Incentives are built in. Validators who do their duties on time receive newly issued units and fees. Validators who go offline lose a little. Validators who provably cheat — for example, by signing two different blocks for the same slot — are slashed: part of their deposit is destroyed and they are forced to leave.
The security argument is economic. Attacking the chain would require acquiring a very large share of all staked units and then risking their destruction. Energy use is far lower than with proof of work; ethereum.org estimates that the Merge cut Ethereum's energy consumption by more than 99.9%.
A simple example
Think of a panel of auditors who each lodge a bond before they may sign reports. Each round, one auditor drafts the report and the others countersign what they see. An auditor who signs two contradictory reports for the same round is caught by simple comparison, and the bond is confiscated.
Common misconception
Misconception: In proof of stake, whoever holds the most units decides which transactions are valid.
In fact: Validators propose and vote on the order of blocks, and influence does grow with stake. But transaction validity is still checked by every node against the rules: validators cannot sign for other people's addresses, and a block with invalid transactions is rejected.
Where you meet it
- Ethereum since September 2022, and many newer networks.
- Terms such as "staking", "attestation" and "slashing".
- Comparisons with proof of work — see our Often confused page.
Related cards
Sources
This card explains a technical concept for general education. It is not a recommendation to acquire, sell or hold any crypto-asset, and it is not financial advice.