The problem every blockchain has to solve
A blockchain is a shared record that thousands of computers keep at the same time. With no bank or company in charge, they need a fair way to agree on which transactions happened and in what order.
Bitcoin solves this with proof of work: miners race to solve puzzles using enormous amounts of electricity. Proof of stake solves it with money at risk instead of energy.
How proof of stake works
Computers called validators take turns proposing new blocks and checking the blocks others propose. To be allowed to do this, each validator locks up some of the network's tokens. That locked amount is its stake.
- A validator that follows the rules earns rewards from the network: newly created tokens and part of the fees people pay.
- A validator that cheats, or goes offline for too long, can lose part of its stake. This penalty is called slashing.
- Because a validator has something to lose, it has every reason to behave.
Which blockchains use proof of stake?
Most of the largest networks launched or upgraded since 2020: Ethereum, Solana, Cardano, Polkadot, Avalanche, BNB Chain, Cosmos Hub, NEAR, Aptos, Celestia and many more.
Why it matters to you
You do not have to run a validator to take part. Anyone can put their funds behind a validator, called delegating or staking, and share in the rewards it earns. Evernodes runs validator nodes on these networks so members can do exactly that from one USDT account.
Questions people ask
- Is proof of stake safe?
- Proof of stake secures some of the largest blockchains in the world, including Ethereum. Like any system it has risks: validators can be penalised for downtime or misbehaviour, and the value of tokens can change.
- What is the difference between proof of stake and proof of work?
- Proof of work secures a network with computing power and electricity (Bitcoin). Proof of stake secures it with tokens locked up by validators, which uses far less energy.