Proof of stake (PoS): validators, staking and risks

Proof of stake (PoS) is a consensus mechanism in which validators lock up their own cryptocurrency as collateral and in return earn the right to propose and confirm blocks. The choice of validator depends on the size of the stake and a random draw. They receive rewards for honest operation and can lose part of their stake for improper behavior (slashing).

PoS uses far less energy than proof of work, but it has its own trade-offs: influence can concentrate among the largest holders, and security depends on the value of the locked coins. Staking, meaning locking coins to earn rewards, carries the risk of losing part of your funds, withdrawal lockups and software bugs, and returns are not guaranteed.