What Is Proof of Stake (PoS)? How It Works

Proof of stake (PoS) is a consensus mechanism: the rules a blockchain uses to decide who adds the next block. Instead of miners racing with powerful computers, validators put up coins as a deposit they can lose if they cheat. New to the topic? Start with what a blockchain is and how it works.

Ethereum has used proof of stake since an upgrade called the Merge on 15 September 2022 (see the Ethereum price and payment options). This guide covers how it works, how it compares with proof of work and the risks of staking.

What does proof of stake mean?

Proof of stake means that the right to add blocks comes from coins you lock up, not from computing power you spend. The “stake” is the deposit. It proves that a validator has something to lose if it breaks the rules.

In a proof-of-stake network:

• Validators lock up coins. They stake the network’s own coin and run validator software on a computer that stays online.
• The protocol hands out jobs. It picks one validator to propose each new block and a group of others to vote on it. On Ethereum, these votes are called attestations.
• Honest work is rewarded. Validators earn new coins and fees. Those that go offline miss rewards, and those that break the rules are slashed.

Validators do the job miners do in proof of work: they check that transactions follow the rules, such as nobody spending the same coins twice. Like other nodes, they keep a full copy of the blockchain.

How does proof of stake choose validators?

Most proof-of-stake networks pick the next block proposer at random, then ask a larger group of validators to vote on the block. Ethereum shows how this works in practice (ethereum.org, as of September 2026):

• Joining. A validator deposits at least 32 ETH into Ethereum’s deposit contract, then waits in an activation queue that limits how fast new validators join. Since the Pectra upgrade of 7 May 2025, one validator can have up to 2,048 ETH counted as its effective balance.
• Slots and epochs. Time is split into 12-second slots. 32 slots make one epoch, about 6.4 minutes.
• Proposing. In every slot, one validator is chosen at random to propose a block. The randomness comes from a mechanism called RANDAO.
• Voting. A randomly chosen committee of validators votes on each block. Every active validator votes once per epoch.
• Finality. When validators holding at least two-thirds of all staked ETH vote for a checkpoint, the blocks before it become final. Reversing a final block would cost an attacker at least one-third of all staked ETH.

Other networks vary the details. To see where validators fit into a transaction, read how Ethereum works.

What is slashing?

Slashing is a penalty that destroys part of a validator’s stake and forces it out of the network when it provably breaks the rules. It is what makes cheating expensive in proof of stake.

On Ethereum, three actions can get a validator slashed:

• proposing and signing two different blocks for the same slot;
• voting for two different candidates for the same block (double voting);
• casting a vote that “surrounds” an earlier one, which amounts to trying to rewrite history.

A slashed validator loses a small part of its stake at once (about 0.0078 ETH on 32 ETH) and is removed over 36 days. Halfway through, it pays an extra penalty that grows with how much ETH was slashed around the same time, up to the whole stake in a mass event (ethereum.org, as of September 2026).

Being offline is different: it costs a validator roughly the rewards it misses, not a slash.

Why is slashing needed? Early designs had a “nothing at stake” problem: backing two competing chains cost a validator nothing, so the network might never agree. Penalties for signing blocks on competing chains remove that incentive, as Vitalik Buterin’s 2017 Proof of Stake FAQ explains.

What is the difference between proof of stake and proof of work?

Proof of work secures a blockchain with computing power and electricity. Proof of stake secures it with coins locked up as collateral. Bitcoin uses proof of work; Ethereum did until September 2022.

Neither model is free of trade-offs. Proof of work turns electricity into security, which is why practical Bitcoin mining now runs on specialized chips called ASICs. Proof of stake uses far less energy, but influence can gather with large holders and staking services. Ethereum.org warns that centralized providers running many validators “can be dangerous for the network.” For the older model, read what proof of work is.

Which blockchains use proof of stake?

Many large smart-contract blockchains use proof of stake, each with its own version. As of September 2026, according to each project’s documentation:

• Ethereum switched from proof of work in the Merge on 15 September 2022. Each validator needs at least 32 ETH. Learn what Ethereum is.
• Cardano runs a proof-of-stake protocol called Ouroboros, in which stake pools create the blocks. Holders delegate ADA to a pool and can still spend it at any time. Read what Cardano is.
• Solana uses proof of stake. SOL holders delegate to validators, and stake only activates or deactivates at the start of an epoch of about two days. Slashing is not automatic on Solana. See the Solana price and payment options.
• Polkadot uses nominated proof of stake. Nominators back validators, and both can be slashed if a validator misbehaves. DOT you unstake stays locked for an unbonding period without rewards.
• Tezos launched in June 2018 as one of the first major proof-of-stake networks. Its validators are called bakers. Holders can stake tez (locked, and it can be slashed) or delegate it (unlocked, and not slashed).
• The Cosmos Hub uses proof of stake too. ATOM holders delegate to validators, and the network runs on the CometBFT consensus engine.

What is staking, and what are the risks?

Staking is locking up coins to take part in proof of stake, either by running a validator yourself or by letting someone else run it for you. Proof of stake is the system; staking is how people take part in it.

Ethereum.org lists four routes: solo staking with your own 32 ETH and hardware, staking as a service, pooled staking and centralized exchanges. Each step away from solo staking adds a middle layer you must trust. The main risks are:

• Lock-ups and exit delays. Ethereum only enabled withdrawals on 12 April 2023, and exits still take a variable time. Solana and Polkadot have their own waiting periods.
• Slashing and penalties. Mistakes by your validator or pool can cost part of the stake. On Polkadot, the people who back a validator share the loss.
• Liquid staking tokens. Pools often give you a token as a receipt. Ethereum.org warns that its price “can fall below the value of the ETH backing it”, and pool contracts can have bugs.
• Custody. If a provider holds your coins and fails or freezes withdrawals, you may have nothing on the blockchain to claim. Learn why your private keys matter.
• Price swings. Rewards are paid in the coin you stake, so a fall in its price can outweigh them.
• Tax. Rewards are often taxable (see the questions below).
• Scams. Be wary of sites that promise fixed high staking returns or ask for your recovery phrase. See how to spot phishing attacks.

Malcolm O'Mahony

Malcolm is a Content Marketing Manager at Coinmama. He's passionate about Web3 and specializes in making complex concepts easy to understand. Crypto since 2017. Coinmama since 2020.

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