Proof of Stake

Proof of Stake is consensus where validators propose and attest to blocks based on how much cryptocurrency they have locked as collateral, not on computational work. Validators lock tokens. Honest work earns rewards. Double signing or invalid blocks get slashed. Security comes from economic loss, not from burning electricity.

95%. Direct participation needs 32 ETH, though liquid staking lets smaller holders join as a group. Critics say large stakers earn more and compound their share. They also ask whether slashable deposits equal the physical cost of Proof of Work energy. Supporters point at severe slash conditions, a large validator set, and the economics of the Merge. Most new chains use Proof of Stake variants.

Bitcoin still uses Proof of Work at the base and has Lightning as a payment layer on top. If they act honestly, they earn rewards. 95%. The criticism of Proof of Stake is that it may favor wealth concentration: larger stakers earn more rewards and compound their relative position.

Most new blockchain networks use Proof of Stake variants, and even Bitcoin's network has seen Lightning Network development to complement its Proof of Work base. Ethereum's proof of stake went live on 15 September 2022 (the Merge). Validators lock ETH instead of burning electricity to mine.