Proof of stake is a way of securing a blockchain in which the right to validate transactions is tied to coins put up as collateral rather than to computing power. Validators "stake" their coins; confirm honestly and they earn rewards, cheat and they can lose part of that stake.
Its main appeal over proof of work is efficiency. Because security comes from economic commitment rather than raw computation, a proof-of-stake network uses a tiny fraction of the energy, which is why several major projects have adopted or switched to it.
Critics argue it can concentrate influence among those who already hold the most coins, and the model is younger and less battle-tested than proof of work. Both designs trade off security, decentralisation and efficiency in different ways.
Worked example
Ethereum switched from mining to proof of stake in 2022, cutting its energy use by more than 99%.
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Frequently asked questions
What does Proof of stake mean?
A method of securing a blockchain in which validators lock up ("stake") coins for the right to confirm transactions, using far less energy than mining.
Is Proof of stake a crypto or a stock-market term?
It is primarily a cryptocurrency term.
Is this Proof of stake definition financial advice?
No. The Market Capitalize glossary is educational — it explains terms and concepts, never a recommendation to buy or sell. See our disclaimer.