POS

What is POS (Proof of Stake)?

A newer consensus mechanism called Proof of Stake has emerged — with the idea of increasing speed and efficiency while lowering fees. A major way Proof of Stake reduces costs is by not requiring all those miners to churn through math problems, which is an energy-intensive process. Instead, transactions are validated by people who stake their tokens.

• Staking serves a similar function to mining, in that it’s the process by which a network participant gets selected to add the latest batch of transactions to the blockchain and earn some crypto in exchange. Stakers also help establish which blocks are valid.

• The exact implementations vary from project to project, but in essence, users vote their tokens to ensure the security of the blockchain. Their staked tokens act as a guarantee that they are acting in good faith and as a disincentive to violating the protocol rules.