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Glossary Term

Proof of Stake (PoS)

Proof of Stake (PoS) is a consensus mechanism used by blockchains like Solana, where validators are selected to confirm transactions and produce new blocks based on the amount of tokens they stake, promoting network security, energy efficiency, and decentralization.

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Crypto Terminology

Proof of Stake (PoS): what is it?

Proof of Stake (PoS) is a blockchain consensus protocol designed to validate transactions and add new blocks to the chain based on the amount of cryptocurrency that network participants (validators) “stake” as collateral. Rather than relying on computational power (as in Proof of Work), PoS protocols select validators in proportion to the quantity of tokens they lock or delegate, incentivizing honest participation with rewards and penalizing malicious behavior.

On PoS blockchains like Solana, users can delegate their SOL tokens to validators. These validators are then randomly chosen, weighted by their stake, to propose and confirm new blocks of transactions. If validators act dishonestly or go offline, part of their stake (in some systems, but not all) may be slashed as a penalty. As a result, PoS networks are far more energy-efficient, scalable, and accessible than traditional mining-based blockchains.

How It Works

  • Token holders (such as SOL owners) either run validating nodes or delegate their tokens to existing validators.

  • Validators are randomly chosen—in proportion to total staked tokens—to propose, confirm, and finalize blocks.

  • Validators receive staking rewards for honest participation, shared with delegates.

  • Security and honest behavior are enforced by economic incentives rather than energy consumption.

Proof of Stake in Solana’s Ecosystem

Solana leverages a highly optimized PoS consensus—combined with Proof of History (PoH)—to enable extremely fast transaction finality and throughput. By staking SOL, network participants help secure the protocol, decentralize block production, and earn rewards. PoS is central to Solana’s design, facilitating high performance while lowering barriers for network participation compared to traditional proof-of-work systems.

Why Is Proof of Stake Important?

  • Significantly reduces energy consumption compared to mining.

  • Enhances decentralization by allowing a broader range of users to participate in securing the network.

  • Aligns network security with economic incentives—validators risk their stake, ensuring honest behavior.

  • Supports composable staking models, including liquid staking, for deeper DeFi integration.

🔑 Key points

  • PoS selects validators in proportion to their staked tokens for transaction validation.

  • Powers Solana’s secure, energy-efficient, and scalable network.

  • Token holders earn rewards by staking directly or by delegating to professional validators.

  • Key foundation for Solana, DeFi, and staking rewards models.

Examples

  • 1

    A user delegates SOL to a validator, sharing in the earned rewards.

  • 2

    Running a Solana validator node with a large amount of staked SOL, producing blocks and securing the chain.

  • 3

    Participating in liquid staking protocols (mSOL, stSOL) to combine PoS yields with DeFi flexibility.

Common Use Cases

Securing Solana and similar networks by staking tokens for consensus participation.
Earning passive income from staking rewards.
Community-driven governance (in some PoS systems).

Pro Tips

💡

Staked tokens remain locked for the duration of staking or unstaking periods—plan liquidity needs accordingly.

Frequently Asked Questions

How does PoS compare to Proof of Work (PoW)?
PoS relies on token staking and random validator selection, greatly reducing energy use, while PoW depends on energy-intensive mining computations.