Proof-of-Stake (PoS)

January 13, 2025

Proof-of-Stake (PoS) is an alternative consensus mechanism to Proof-of-Work. Instead of miners solving complex puzzles, PoS relies on validators who lock coins as collateral to propose and validate blocks.

How Proof-of-Stake Works

  1. Validator’s Role:

    • The validator (or miner) locks a certain amount of coins as collateral.
    • N represents the total number of validators.
    • The simplest election method is round-robin, where validators are chosen in a predetermined sequence. The validator has a probability of 1/N to be elected as the next proposer.

  2. Validator Election:

    • Validators are elected to propose blocks based on the amount of coins they lock. The more coins locked, the higher the chances of being selected.

  3. Desired Properties:

    • Live: Proposals happen regularly.
    • Fair: Each validator has a proportional chance of being elected.
    • Permissionless: Open participation is allowed, but the validator needs to be able to acquire coins.

Staking Design Choices

  1. Required Coins to Lock:

    • Can be fixed (e.g., Ethereum 2.0 requires 32 ETH).
    • Can be variable, depending on the protocol.

  2. Delegated-Proof-of-Stake:

    • In some systems, delegated Proof-of-Stake (DPoS) allows stakeholders to delegate their stake to validators instead of locking it themselves.

  3. Limiting Validators:

    • Some protocols limit the number of validators by:

      • Randomly selecting a subcommittee.
      • Delegating stakes to active nodes.

    • Note: In this discussion, fixed staking without delegation is used.

Ethereum's Switch from PoW to PoS

  • The Merge (Sep 15, 2022):
    • Ethereum transitioned from Proof-of-Work to Proof-of-Stake.
    • Energy Savings: Reduced electricity usage by 30,000 times.
    • Global Impact: Ethereum’s switch reduced its share of global electricity consumption to about 99.8% less than before.