What is proof of stake?
Securing a blockchain with locked-up coins instead of electricity.
In proof of stake, validators lock up (stake) the network's coin as a deposit. The protocol picks validators to propose and vote on new blocks, pays them rewards for honest work, and can destroy part of their stake (slashing) if they cheat. Ethereum has used it since 2022.
How it works
- Validators deposit coins as a stake. On Ethereum the minimum per validator is 32 ETH.
- The protocol randomly picks a validator to propose each block, and committees of others vote that it's valid.
- Honest validators earn new coins and a share of fees.
- Validators who break the rules, such as signing two different blocks, can be "slashed": part of their stake is destroyed and they're removed.
Proof of stake vs. proof of work
| Compare | Proof of work | Proof of stake |
|---|---|---|
| Who adds blocks | Miners with computing power | Validators with staked coins |
| Cost of cheating | Hardware and electricity | Losing the staked coins |
| Energy use | Very high | Very low |
| Examples | Bitcoin, Litecoin | Ethereum, Solana, Cardano |
| Common criticism | Energy use | Large holders and staking companies gain more influence |
Staking as a regular person
Most people don't run a validator. Instead they stake through an exchange, a staking pool or a "liquid staking" service, which pools coins and shares the rewards minus a fee.
- The reward isn't guaranteed and the coin's price can fall by far more than you earn.
- Lock-ups: withdrawing can take days or longer.
- The middleman: if the exchange or service fails or is hacked, your staked coins can be at risk.
- Be wary of anyone promising a high fixed "staking" return; that's a common scam pitch.
Frequently asked questions
Is staking free money?
No. It's a reward for helping secure the network, paid in a coin whose price can fall. There are also lock-up periods, fees and the risk of the service you stake with.
What is slashing?
A penalty in which part of a validator's staked coins is destroyed for provably breaking the rules, such as voting for two conflicting blocks.
Are staking rewards taxed?
In the US, the IRS treats staking rewards as income when you gain control of them. See our guide to crypto taxes.
Where to next
Sources
Written for beginners and checked against the sources listed. Last reviewed October 26, 2026. This page is educational and is not financial, tax or legal advice. How we write and check pages.