Operational Process
- Participants lock up tokens to become validators.
- Validators are selected to create new blocks based on their stake and sometimes randomness.
- Misbehavior (e.g., double-signing or downtime) can lead to slashing of their staked assets.
Economic Model
- Validators earn staking rewards and transaction fees proportional to their staked amount.
- No need for expensive hardware—anyone with enough tokens can participate.
- This creates a more inclusive and energy-efficient system compared to PoW.
Popular PoS networks include Ethereum 2.0, Cardano, Polkadot, and VeChain, each with unique mechanisms for balancing scalability and decentralization.
Security Principles
PoS secures the network through
economic deterrence. To attack the system, a bad actor would need to control a large amount of staked
tokens—putting their capital at serious risk. The slashing mechanism ensures that
dishonest behavior results in direct financial loss, keeping the network aligned and secure.