Proof of Stake

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Miners/validators on a Proof of Stake (PoS) blockchain must have a certain amount of the blockchain currency reserved to be part of the blockchain network. The protocol randomly select a node to create a new block, while the larger the size of the stake the bigger the probability to be selected. There is no reward for creating a block but a penalty (losing your staked coins) for tampering transactions. Stakeholders are rewarded by a percentage of the coins put at stake.

A good explanation can be found at ledger.com.

Examples of PoS blockchains are Cardano and Polkadot.

PoS allows a bigger transaction rate with far less resources compared with Proof of Work blockchains.

Chalenges

Like Proof of Work blockchains are vulnerable for someone controlling 51% of the mining capacity, Proof of Stake blockchains may have someone having a majority of the coins staked.


Delegated Proof of Stake (DPoS)

This means stakeholders delegate there validation rights to other nodes. The stakeholder just receives the interest.

Examples of DPoS blockchains are Cosmos and EOS.

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