What is Proof of Stake
Proof of Stake is how many blockchains verify transactions and keep the network secure. Here is how it works in plain terms.
What does Proof of Stake mean?
Every blockchain needs a way to decide which transactions are valid and who gets to add the next block. This process is called consensus. Proof of Stake (PoS) is one method for reaching consensus.
In Proof of Stake, participants lock their tokens in the network. This is called staking. The more tokens you have staked, the more likely you are to be selected to validate the next block. When you validate successfully, you receive a share of the new tokens emitted by the protocol as compensation for the validation work.
The logic is simple: if you have tokens locked in the network, you have an incentive to keep it honest. You would lose value if the network failed.
How is Proof of Stake different from Proof of Work?
Before Proof of Stake, most blockchains used Proof of Work (PoW). Bitcoin still uses it today.
In Proof of Work, computers compete to solve complex math problems. The first one to solve it adds the next block and earns a reward. This requires specialized hardware and large amounts of electricity. It works, but it is expensive and energy-intensive.
Proof of Stake replaces that competition with a selection process based on how many tokens a participant has staked. No mining hardware needed. No energy race. The network reaches the same result with far less resource consumption.
Ethereum moved from Proof of Work to Proof of Stake in September 2022. BNB Smart Chain has used a Proof of Stake variant since its launch.
What does staking means in practice?
Staking is how you participate in Proof of Stake. You lock tokens in a smart contract. The protocol uses those tokens as part of the validation process. In return, you receive a proportional share of new tokens emitted by the protocol according to the rules programmed into the smart contract.
The rewards come from programmed emission. The smart contract defines how many tokens are distributed and how they are split among participants. The rules are in the code. Anyone can read them.
On Inkryptus, staking follows a similar principle. The INKY Token contract emits up to 20,000 INKY a day: 10,000 INKY across the common pools and up to 10,000 INKY more for the Arena Staking Pool. That pool is distributed proportionally among all stakers based on their share of the total staked amount. You can verify the emission and the staking pool on BscScan at any time.
For a deeper look at staking mechanics, see Crypto Staking Guide.
How do Proof of Stake and Proof of Work compare?
| Feature | Proof of Work | Proof of Stake |
|---|---|---|
| How blocks are validated | Mining (computing power) | Staking (locked tokens) |
| Hardware required | Specialized (ASICs, GPUs) | Standard computer |
| Energy consumption | High | Low |
| Entry barrier | Expensive hardware | Token ownership |
| Examples | Bitcoin | Ethereum, BNB Smart Chain |
Keep learning
Proof of Stake connects to several other concepts in crypto:
DeFi Explained | Crypto Staking Guide | How Does Blockchain Work | What is a Smart Contract
Crypto asset investments involve risks, including price volatility and risk of partial or total loss of the invested amount. Digital tokens are not legal tender. This content is informational and does not constitute investment advice.