Proof of Stake is a blockchain consensus mechanism where validators secure the network by locking up tokens as collateral rather than using mining machines.
How It Works
Validators are chosen to propose and verify blocks based on network rules. If they act honestly, they can earn rewards. If they act maliciously or fail to perform, they can be penalized through slashing or missed rewards.
Ethereum uses proof of stake, with validators staking ETH to help maintain the network.
Why It Matters In Crypto
Proof of Stake matters because it is more energy-efficient than proof of work and allows token holders to participate in network security.
It also creates staking markets, validator businesses, and liquid staking products. A practical example: a user stakes ETH to help secure Ethereum and receives rewards for participating.