What is proof of stake

Proof of stake is a way for a blockchain to agree on which transactions are valid by having participants lock up coins as collateral instead of burning electricity on computation. People who "stake" their coins get randomly chosen to confirm new blocks, and they earn rewards for doing it honestly. If they approve fraudulent transactions, they lose part of their stake, a penalty called slashing.

It matters because it lets networks run securely on a fraction of the energy that mining requires, which is why Ethereum switched from proof of work to proof of stake in 2022, cutting its energy use by over 99%. Readers often ask how to participate: most exchanges and wallets let you stake coins directly, though running your own validator usually requires a minimum deposit, 32 ETH in Ethereum's case.