Proof of Stake (PoS)

Block validators are chosen according to the number of coins they are staking in a Proof of Stake (PoS) consensus method. Staking in this context refers to validators contributing money to the system. Therefore, validators can only take part in creating new blocks if they lock their currencies. Consequently, the locked funds will serve as collateral, which means that dishonest validators will probably lose their investment and be banned from the network. On the other hand, as new blocks are created (forged), honest validators will be rewarded. In light of the economic stake that validators pledge to the network, we can say that a PoS blockchain achieves distributed consensus. The Proof of Stake (PoS) system was created as an alternative to Proof of Work (PoW), and as such, it has some benefits and drawbacks. The validators (miners) on PoW-based blockchains can only be compensated for finding a correct answer to a cryptographic puzzle. They can now add the next block of transactions to the blockchain if they can come up with a suitable solution. Blockchains that use the PoS model arrive at consensus through a procedure that chooses validators based on a number of criteria. Block selection implementation varies, but it typically takes the "coin age" (the length of time that coins have been staked) into account. Most often, a randomization technique is used for block selection, which means that validators forge new blocks alternately. The PoS methodology, in contrast to PoW, uses extremely minimal computational power, and validators can protect the network using their own computers instead of specialist mining equipment. PoS systems can thus offer higher degrees of scalability, energy efficiency, decentralization, and security. The Leased Proof of Stake (LPoS) and Delegated Proof of Stake (DPoS) processes are two modified variants of the classic Proof of Stake architecture. In addition, we have hybrid consensus systems, such as the Hybrid PoW/PoS model, which includes elements of both PoW and PoS models.