Proof of Stake
Proof of work makes block producers burn electricity so that cheating costs them. Proof of stake reaches the same goal another way: producers put down a deposit that they lose if they cheat. In 2022 Ethereum switched from work to stake, and its energy use fell by more than 99%.
The rule
Proof of stake: lock coins as collateral; cheat and lose them.
- Stake. To become a validator, you lock coins in the protocol. On Ethereum one validator needs at least 32 ETH.
- Selection. For each time slot (12 seconds on Ethereum) the protocol picks a proposer pseudo-randomly, with more stake meaning more chances. Other validators attest: they sign votes saying the proposed block is valid.
- Rewards. Validators who propose and attest correctly earn newly issued coins and fees.
- Penalties. Being offline costs small penalties. Provable cheating, such as signing two different blocks for the same slot, triggers slashing: part of the stake is destroyed and the validator is thrown out.
- Exit delay. Unstaking takes time on purpose, so a cheater cannot withdraw before the penalty lands.
To take control of the chain, an attacker would have to acquire a large share of all staked coins, which is very expensive, and would then risk losing that stake once caught. The capital is both the lottery ticket and the collateral.
Environmental considerations. Proof of work spends energy deliberately; proof of stake needs only ordinary servers that sign and check blocks, which is where the energy saving comes from. The trade-off is that security now rests on the value of locked stake, and stake can pile up with a few large holders or staking services. How concentrated the stake is becomes an important decentralization question.
The shortcut
Translate proof of work into proof of stake with two swaps: computing power becomes locked coins, and the electricity bill becomes the risk of slashing. Nearly every proof-of-work question has a proof-of-stake twin.
Lock the stake
Kabir deposits coins with the protocol. While staked, they cannot be spent.
The trap is thinking stake is just a vote. It is collateral: it can be destroyed, and it cannot be pulled out instantly.
Drills
Answer fast — trust the rule.
In proof of stake, what plays the role that computing power plays in proof of work?
What is slashing?
Which action would get a validator slashed?
Why did Ethereum's energy use fall by more than 99% after the move to proof of stake?
Remember
- Proof of stake: lock coins as collateral; cheat and lose them.
- Shortcut: computing power becomes locked coins, and the electricity bill becomes slashing risk.
- Trap: stake is collateral, not just a vote, and the energy saving raises a new question: how concentrated is the stake?