What it is
Proof of Stake (PoS) is a consensus mechanism used by blockchains like Ethereum to validate transactions and create new blocks. Instead of miners competing with computational power (as in Proof of Work), validators are chosen to create new blocks based on the amount of cryptocurrency they "stake" or lock up as collateral. This stake acts as a financial incentive to behave honestly and maintain network integrity.
Ethereum transitioned from Proof of Work to Proof of Stake in 2022, an event known as "The Merge." This change significantly reduced Ethereum's energy consumption and altered its economic model. For retail investors, PoS means they can participate in network security by staking their ETH, either directly or through liquid staking services, to earn rewards. This shift impacts network security, decentralization, and the supply dynamics of Ether.
Why it matters
PoS is Ethereum's consensus mechanism, affecting its security, energy use, and how you can earn rewards by staking ETH.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice