What is Proof of Stake?
Proof of Stake (also known as PoS) is a system which secures blockchain networks by requiring participants, known as validators, to lock up a certain amount of cryptocurrency—referred to as a stake—in order to validate transactions. Validators earn a reward—often referred to as a block reward—when they successfully validate a set of transactions, known as a block.
Ethereum is the most well-known cryptocurrency that uses Proof of Stake, having transitioned from Proof of Work in 2022. Solana also uses a PoS-based approach, combined with a supplementary mechanism called Proof of History.
Proof of Stake is a type of consensus mechanism—a method used by blockchains to validate transactions. It was introduced as an alternative to the energy-intensive Proof of Work model. Other well-known types of consensus mechanisms include Proof of Work and Proof of History. For more information about Proof of Work, please read our article called What is Proof of Work?
How Proof of Stake secures transactions
After locking up their cryptocurrency, validators become eligible to create and confirm new blocks.
Unlike Proof of Work, where miners compete using computing power to guess a long number, Proof of Stake (PoS) typically selects validators based on a combination of stake size and randomization.
• Stake Weighting: The more a validator stakes, the higher their chances of being chosen. While larger stakeholders have an advantage, the system ensures they don’t always win.
• Randomization Techniques: PoS networks use various randomization methods—such as lotteries or cryptographic shuffling—to prevent the same validators from being selected repeatedly.
This balance of randomness and stake size helps maintain fairness while still encouraging validators to stake as much as possible.
When selected, a validator gathers recent transactions, packages them into a block, and broadcasts it to the network. Other validators verify the block’s validity, ensuring all transactions follow the rules.
If the block is valid, it is added to the blockchain, and the proposing validator earns a reward. If it contains invalid or conflicting data, the validator can be penalized through slashing—losing part or all of their stake. This mechanism aligns economic incentives with honest participation, as validators seek to earn rewards rather than risk their funds.
While Proof of Stake is more energy-efficient and scalable than Proof of Work, it has its own trade-offs—such as the risk of large stakeholders gaining excessive influence. To explore these challenges further, read our article: What is the blockchain trilemma?.
It is currently possible to stake Solana, Ethereum and Cardano directly from Trezor Suite. To learn more, please read the following articles:
Staking Solana in Trezor Suite
Staking Ethereum in Trezor Suite
Staking Cardano in Trezor Suite
Advantages and disadvantages of Proof of Stake
Just like any consensus mechanism, Proof of Stake comes with it’s own series of advantages and disadvantages.
Advantages of Proof of Stake
The main advantage of Proof of Stake is its energy efficiency compared to Proof of Work.
Because it doesn’t rely on computing power, operating a Proof of Stake network requires less energy and is generally more affordable. While Proof of Work demands increasing computing power as more participants join, Proof of Stake allows users to join the network by purchasing and staking coins.
This also leads to a second benefit - Proof of Stake transactions tend to be both faster and cheaper than transactions on a Proof of Work network, which also leads to higher scalability. For example, it is significantly cheaper and faster to run a complex blockchain dApp.
For more information about this, please read the following articles:
What is the blockchain trilemma?
Disadvantages of Proof of Stake
Naturally, the advantages of Proof of Stake are paired with some disadvantages. The main disadvantage of Proof of Stake is that a Proof of Stake network is susceptible to what is called a 51% attack - someone could purchase more than 50% of the coins in the network and end up controlling the entire network. While this becomes significantly unlikely as the network grows, this is a theoretical possibility.
Given this possibility, it means that it is much easier to take over a Proof of Stake network with a malicious attack than a Proof of Work network.