Proof of Stake (PoS) is a blockchain consensus algorithm used to secure and support the network through staking of cryptocurrency tokens.
Unlike other consensus algorithms, such as Proof of Work (PoW), where miners use computing power to solve complex mathematical problems, with PoS, blockchain network participants must freeze a certain number of tokens in order to become “validators” and be able to create new blocks. The selection of stakers to create new blocks is based on random selection, but the probability of a staker being selected is proportional to the number of tokens it has frozen. The more tokens a staker has, the higher his chance of creating a new block.
With PoS, participants who lock up their tokens for staking can receive rewards in the form of new tokens as well as transaction fees on the blockchain. Due to this, PoS is considered a more efficient and environmentally friendly algorithm since it does not require computing power and energy as in PoW.
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