Overview
In PoS networks, staking serves a similar purpose to mining in PoW. Instead of using energy to solve puzzles, participants 'stake' their tokens to be eligible to validate transactions and earn rewards.
Key Concepts
- Rewards: Stakers earn a portion of transaction fees or newly minted tokens.
- Slashing: A penalty where a portion of a staker's funds is taken if they act maliciously or fail to maintain uptime.
- Delegation: Users can often delegate their tokens to a professional validator if they don't want to run their own node.
Benefits
Staking is much more energy-efficient than mining and allows more users to participate in network security.