Understand what Proof of Stake in cryptocurrency means in one article

The concept of Proof of Stake

Because cryptocurrency is decentralized and not controlled by financial institutions, then at this time, he needs a method to verify transactions; a method used by many cryptocurrencies The method is Proof of Stake (PoS).

Proof-of-stake is a blockchain network consensus algorithm that is based on randomly selected validators to produce and approve blocks, and the validators pass within the blockchain Lock tokens to “stake” native network tokens. Validators are rewarded based on the total amount of their stake.

Bitcoin’s proof-of-work (POW) consensus consumes a lot of energy, so people generally believe that POS is more environmentally friendly and is a scalable version.

Validator

In proof of stake, the selected validator produces the next block based on their own equity pledge. Although random functions are usually designed to avoid consensus jumping, But validators with larger stakes will have a greater chance of generating the next block. Blocks are submitted by some validators and then propagated to other validators. After verification by these validators, the approved blocks are added to the blockchain.

Advantages of PoS

It is worth noting that because the incentive method is economically driven and native tokens are issued as rewards, PoS can bypass the lottery-like calculation process in the proof of work. Design has important implications in areas such as performance and cybersecurity.

In terms of performance, Proof of Stake has a "fast finality" consensus design and performs well in TPS and network transfer settlement.

In terms of security, validators also have more incentive to act honestly when creating blocks and approving transactions.

In terms of energy, compared with PoW, PoS consumes less energy and reduces its impact on the environment.

Risks of PoS

Everything has pros and cons, and PoS is no exception. Although PoS has many advantages, there are also some risks, such as tycoon attacks, that is, holding large amounts of Native token whales may take control of the network and manipulate transactions. In order to prevent this situation, some PoS cryptocurrency projects will take additional measures, such as random accounting or setting maximum currency holding limits.

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