POS: Proof of Stake
Proof of stake is a consensus mechanisms cryptoassets can employ to secure their blockchains. Blocks are validated by owners of the networks token who stake their coins and earn rewards in return for providing this service. Staking entails token holders locking their tokens as collateral in the nodes which validate blocks for the network.
Multiple nodes validate blocks. This number varies depending on the protocol. Ethereum for example requires 128 nodes to verify a block before it is submitted for confirmation. When ⅔ of nodes on the Ethereum network confirm the block is valid it is added to the chain.
As opposed to Proof of Work networks which add blocks through the mining process. Validators on POS networks are selected randomly. With higher staked nodes having a better chance of receiving rewards. If I have 1 token and you have 10. You have 10 times the chance of receiving a reward since my stake is 1/10 the size of yours.
Typically a minimum amount of tokens need to be staked to a node to be eligible for rewards. Minimums are in place as an aspect of network security.
The collateral provided is subject to slashing. If a node fails to live up to its responsibilities to secure the network or acts maliciously and interferes with the network’s operation. A penalty is assessed and the node forfeits a portion of their collateral which is redistributed to the stakers properly operating their nodes.
51% attacks are usually less of a concern for POS networks. The Ethereum example demonstrates why.
Even if an entity accumulates 51% of Ethereum’s outstanding token supply. Unless they can get ⅔ of nodes to sign off on their proposed blocks. They won’t move from validation to confirmation.
Further Reading Proof of Stake
Proof of Work vs. Proof of Stake: Why the Difference Matters