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What is Proof of Stake?

proof of stake blockchain

Numerous research has looked into how much power PoW-based blockchains use. For instance, a 2021 follow-up investigation revealed that Bitcoin mining now consumed 121.36 terawatt-hours of energy annually. The platform uses more electricity annually than Argentina, the Philippines, the Netherlands, and Switzerland.

The severe drawbacks of the proof-of-work consensus mechanism became the cornerstone of the emergence of a different kind of consensus mechanism of crypto mining, power-of-stake(pos). There is a noticeable difference between pow and pos. This article widely discusses pos in blockchain networks.

What does proof-of-stake mean?

Cryptocurrencies require a method of transaction verification because they are decentralized and independent of financial institutions. Proof of stake is (pos) one of many mechanisms several cryptos employ to verify its transaction on the blockchain.

The Proof of Stake (PoS) algorithm aims to obtain distributed consensus in a Blockchain. Quantum Mechanic first proposed it in 2011. With this approach, cryptocurrency owners can stake their coins, allowing them to review and approve new blocks of transactions to the blockchain network.

The proof of stake blockchain model enables cryptocurrency owners to stake their currencies and establish independent validator nodes. Staking is pledging one’s coins for use in transaction verification. While someone stakes these coins, they are locked up; they can also un-stake them if they wish to trade them.

How does proof-of-stake actually work?

Before moving on to how proof-of-stake works, it is crucial to understand stake meaning crypto. Staking is the agreement to lock up a certain quantity of bitcoin in return for the opportunity to verify newly added blocks to a blockchain. Owners who stake crypto, also known as validators, put their cryptocurrency in a smart contract stored on the blockchain.

Depending on how much cryptocurrency each validator has invested, the blockchain algorithm chooses validators to examine new blocks. Someone’s chances of getting the role of validator increase with the amount they stake. The delegated proof of stake validator receives new crypto as payment once a new block is recorded on the blockchain.

In POS, a participant, or node, is chosen to validate a transaction while the coins serve as collateral. With proof of stake, several validators must agree, and enough nodes must confirm that a transaction is legitimate before it is approved.

However, a validator will lose his staked coins if they are discovered to have validated an invalid block. Additionally, validators who behave maliciously risk losing their stake as a penalty. Network users can also validate a block by joining a staking pool managed by a different validator and participating in the pool’s rewards system.

Other determining elements are utilized in addition to the stake amount to ensure that only the wealthiest validators can validate a block. Pure randomization and the duration of time a validator stakes a coin are two of many determining variables.

Pros & Cons of Proof of Stake

Pros of PoS

  • One of the main benefits of proof-of-stake as a consensus mechanism, particularly when compared to proof-of-work, is that it does not require using powerful computers and vast amounts of energy. In other words, it is energy efficient.

  • Proof-of-stake has the benefit of securing the blockchain by rewarding appropriate validation and discouraging improper ones. Validators receive a share of the transaction fee. They risk losing their stake if they approve fraudulent transactions.

  • A blockchain network based on proof-of-stake is much more scalable when compared to proof-of-work because it is more decentralized and enables the participation of more people and groups. 

  • Proof of stake delivers faster transaction times and supports higher transaction volumes than proof of work currencies. PoS also has a meager network fee.

Cons of PoS

  • There are more security dangers when fewer computers are in the network. Notably, anyone who holds 51% or more of a cryptocurrency has more control over the entire network.

  •  A PoS-based blockchain is not easily accessible. The technological and technical challenges associated with owning cryptocurrency and comprehending blockchain may discourage a person from using the network.

  • Then there is the issue of aiding the rich in their pursuit of wealth. The more crypto an individual can afford to buy, the more they can stake and earn because it involves staking cryptocurrency to participate. A more significant stake means better odds of becoming the chosen validator and profiting from it.

Which crypto is proof of stake?

Coins that rely on staking for security are known as proof-of-stake (PoS) cryptos. Users stake their coins on the possibility of adding the following block to the blockchain and receiving the appropriate reward. Currently, there are various pow and pos coins in the market. However, some of the prominent pos cryptocurrencies are as follows:

  • Ethereum
  • Cardano
  • Solana
  • Algorand
  • Tezos
  • Mina
  • Polkadot
  • Avalanche
  • Toncoin
  • Cosmos

What is the goal of Proof of Stake?

The POS in blockchain intends to decrease network congestion issues. Due to the competitive nature of proof-of-work’s method of transaction verification, people seek to take ill advantages, especially when a large sum is at stake.

Secondly, proof of work uses significantly more energy than proof of stake. For instance, according to research from the Cambridge Center for Alternative Finance, the bitcoin network alone consumes as much power as Sweden or Malaysia combined.

It is due to Proof of Work’s need for more complex hardware. The proof of stake mining demands far less effort and no specialized tools. As a result, its goal is to become a more sustainable choice than POW. Ethereum Foundation confirms that switching to PoS will lead to a network with lesser energy consumption.

Thirdly, Proof of Stake seeks to outperform Proof of Work by enabling more scalable blockchains and easier adoption among new users thanks to its faster transaction rates and more energy-efficient energy requirements.

Additionally, proof of stake offers chances to increase one’s cryptocurrency earnings. When someone deposits coins in a liquidity pool, they receive additional coins as a reward. A proof of stake network has more options to make revenue and connect to a financial system than a proof of work network.

The proof of stake protocol seeks to produce accurate data on the network. It is because a validator needs to validate the blocks correctly to avoid losing all their stakes. Therefore, before updating it on the blockchain network, validators ensure that each block is accurately validated.

What is Mining power in proof of stake?

The amount of coins a validator stakes determines the mining power in proof of stake. It is more likely that participants who stake more coins will access the right to add additional blocks. It makes crypto mining in the POS consensus mechanism very energy efficient. However, the way that each proof-of-stake protocol selects validators varies. 

The selection procedure can also be influenced by various elements, such as how long validators are staking their coins. For instance, If someone stake coins up 0.04% of the overall staking value, then the likelihood of that individual getting selected as a validator would be 0.04%. However, there is typically some degree of randomization involved.

Proof of Stake coins List

Ethereum 2.0

The largest pos crypto project currently exists and is Ethereum 2.0. It’s also the one with the highest level of competition; in February 2021, the system had more than 100,000 validators. Average rewards resulting from such a competition are fractions of ETH (0.0020-0.0075 ETH per participant).


The proof-of-stake consensus is the foundation of the open-source Cardano (ADA) platform, which offers a decentralized and peer-driven blockchain. With the help of the PoS protocol Ouroboros, Cardano made it possible for the network to provide staking pools where owners of ADA can stake.

Staking pools guarantee the upkeep of the staked assets and approve Cardano transactions. The transaction cost of Cardano averages 0.16 ADA ($0.064), making it one of the most energy-efficient cryptos in the list of all pos coins for staking.


The decentralized network Tezos powers dApps and smart contracts. It employs a Turing complete protocol to authorize transactions and fix its own mistakes. XTZ is not a clone of another blockchain, contrary to many other coins. It was created entirely in the OCaml programming language. It even has its Liquid Proof of Stake (LPoS) mechanism.


Another layer-1 network that supports smart contracts and serves as a hub for decentralized applications and private blockchain networks is Avalanche (AVAX). Avalanche, a well-known Proof of Stake cryptocurrency, supports 6,500 TPS. The innovative blockchain architecture of Avalanche allows for such fast transaction speeds. 


Algorand, a widely used proof-of-stake cryptocurrency, is known as the greenest blockchain network in the crypto-sphere. It offers a distinctive value proposition since, like payment processors like Mastercard and Visa, it is made to handle a massive volume of transactions promptly. This proof-of-stake blockchain can host other cryptocurrencies and blockchain projects, making it a serious rival to Ethereum. 


One of the top proof-of-stake coins by market capitalization, presently ranked second, Solana is a leading candidate. It should be noted that Solana is a blockchain network that combines the proof-of-stake and proof-of-history consensus algorithms. 


Polkadot (DOT) is a proof-of-stake cryptocurrency that solves the issue of cross-network interoperability by using its innovative parachains. It is a technology that allows transactions to be settled parallel to one another. This concept immensely popularized Polkadot in no time.


The native currency of Binance, the most well-known cryptocurrency exchange in the world, is Binance Coin (BNB). It fuels the BNB Chain, a platform for smart contracts that houses thousands of decentralized applications (dApps). Right now, it ranks as the fourth-most valued cryptocurrency worldwide. BNB is one of many pos coins in Binance, but it is trendy for deflationary tokenomics.


The three primary consensus mechanisms, pow pos poc, currently employed by decentralized finance (DeFi) initiatives to cryptographically reach consensus on cryptocurrency networks are proof-of-work, proof of capacity, and proof of stake. Due to the energy efficiency of POS, many well-known names in the crypto-sphere have moved on from proof of work to proof of stake consensus mechanism, for instance, Ethereum.

Proof of stake helps cryptocurrency users and investors because of how it functions. Proof of stake-based cryptocurrencies can execute transactions rapidly and economically, which is essential for scaling. Proof of stake will gain more acceptance as a consensus process because it is environmentally sustainable.

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