Proof Of Stake

 

Proof of Stake is a mechanism with the similar purpose as that of Proof of Work but it validates the transactions by deterministically picking the maker of the new block based upon his assets which are termed as ‘stake’.

 

In the PoS system, there is no block reward instead of the chosen maker (commonly called as Miners) of the block, charge the transaction fees. Hence, such miners are also known as forgers. The core idea of Proof of stake is that instead of wasting electricity on cracking computationally heavy problems, a node is selected to mint a new block, with a probability proportional to the amount of coins this node has. If a node has positive (> 0) stake, it is called a stakeholder. If a node eventually becomes chosen to mint a block, it is called a slot leader. 

 

Proof of stake will make the consensus mechanism completely virtual. With the same overall process with POW, the method of reaching the end goal in POS is entirely different. 

 

Instead of solving cryptographically hard puzzles by using their computational resources, validators in POS (instead of miners in POW) lock up some of their coins as a stake in the ecosystem. Following that, the validators bet on the blocks that they feel will be added next to the chain. When the block gets added, the validators get a block reward in proportion to their stake.

 

Minting is the computer process of validating information, creating a new block and recording that information into the blockchain. These blocks contain transactions that were initiated by users of the network. The role of the minter is to process these blocks of transactions and provide security for the network. By minting new blocks for the network, users on a PoS blockchain verify transactions and receive new coins for their participation.