Proof-of-Stake¶

Many networks use the Proof-of-Work model to add blocks to their blockchains. The problem with Proof-of-Work is that it requires considerable computing power. That has led to significant energy usage from networks that use Proof-of-Work.

Proof-of-Stake, on the other hand, doesn't require nearly as much energy. This also makes it a more scalable option that can handle greater numbers of transactions.

What is Proof-of-Stake?¶

Proof-of-Stake in crypto is a consensus mechanism or a way for a blockchain to validate transactions. The nodes in a blockchain must be in agreement with the present state of the blockchain and decide which transactions are valid.

There are different consensus mechanisms that are used by networks. Proof of stake is one of the most popular for its efficiency and because participants can earn rewards by staking their tokens.

Staking rewards are an incentive that blockchains provide to participants. Each blockchain has a set amount of crypto rewards for validating a block of transactions. When you stake your tokens with a validator and, you will receive rewards on those tokens.