GLOSSARY // Crypto
Proof of Stake
Proof of stake replaces mining with collateral. Instead of burning electricity to win the right to add a block, validators lock up coins as a stake, and the protocol picks who validates in rough proportion to how much they have staked. Cheat, and the network slashes your stake.
It cuts energy use by more than 99% versus proof of work and lets ordinary holders earn yield by staking. The tradeoff critics raise is concentration: influence tracks how many coins you hold, so wealth can compound into control of the network in a way that raw computing power does not, at least in theory.
Ethereum's 2022 switch to proof of stake dropped its energy draw from that of a small country to that of a large office building, while letting holders stake for roughly 3-4% yield instead of running mining rigs.
Related terms
Educational only — not financial advice. Definitions simplified for clarity; markets are messier than definitions.