Proof of Stake (PoS)

PoS is a newer, less energy-intensive, and thus more sustainable consensus mechanism than PoW. Through PoS consensus, holders of a blockchain asset can participate in securing and validating on-chain transactions by delegating their stake to a validator.

Launched in 2012, Peercoin was the first PoS project. Cardano, Polygon, and Tezos are three popular PoS blockchains. Ethereum has recently moved from PoW to PoS after a successful ‘Merge’.

It is important to note that unlike Ethereum’s version of PoS, however, Cardano’s PoS mechanism:

• Enables liquid staking (i.e. no lock-up) through which holders of Cardano native tokens can withdraw their stake or delegate it to another validator (stake pool) at any time.

• Requires a small initial amount of 2.17 ada to start staking

• Has no slashing feature that risks unfairly punishing delegators for staking to nodes that do not operate as intended.

Ouroboros is Cardano’s PoS consensus protocol and was the first provably secure PoS protocol. In other words, Ouroboros offers mathematically verifiable security against attackers. The protocol is guaranteed to be secure, as long as 51% of the stake is held by honest participants. According to Google scholar, the original paper has been academically cited more than 1400 times, and variants of the protocol are used on other PoS chains.