What is Proof of Stake in Ethereum?
Proof of Stake (PoS) is a consensus mechanism utilized by the Ethereum blockchain, particularly after its transition from Proof of Work (PoW) with the Ethereum 2.0 upgrade. Unlike PoW, where miners solve complex mathematical problems to validate transactions, PoS allows validators to create and verify new blocks based on the number of coins they hold and are willing to "stake" as collateral.
In PoS, validators are selected to propose and validate blocks in proportion to their holdings. This means that the more Ether (ETH) one owns and stakes, the higher the chance of being chosen to validate transactions, earn rewards, and accumulate more ETH. This mechanism encourages users to hold onto their ETH rather than sell it, as staked ETH generates passive income through transaction fees and incentives.
The adoption of Proof of Stake in Ethereum is seen as environmentally friendly compared to PoW, as it significantly reduces energy consumption. Moreover, PoS aims to enhance security and decentralization. By allowing users to participate in the network without the need for specialized hardware, Ethereum potentially attracts a broader base of contributors while ensuring that the network remains resilient against attacks.