Proof of Stake is a consensus mechanism where validators lock up cryptocurrency as collateral to earn the right to add blocks, and lose part of that stake if they act dishonestly. With capital at risk, it replaces the energy-intensive mining of Proof of Work. On 15 September 2022, Ethereum switched to it, cutting the network's energy consumption by roughly 99.95%.
The problem Proof of Stake solves
Without a central authority, a distributed network needs a way to agree on which transactions are valid, and it needs to make cheating expensive.
By burning electricity, Proof of Work does that. To attack Bitcoin means out-computing the entire network, which costs more in hardware and power than the attack could return.
By putting the attacker's own money on the line, Proof of Stake does it. Validators deposit collateral. Honest work earns rewards. Dishonest work triggers slashing, which destroys part of the deposit. The security comes from the stake, not the electricity.
How staking works on Ethereum
Five steps on Ethereum, the largest Proof of Stake network.
- A validator deposits 32 ETH as stake.
- The protocol selects validators partly at random, weighted by stake, to propose blocks.
- Other validators attest to the proposed block's validity.
- Honest proposers and attesters earn newly issued ETH plus transaction fees.
- Validators caught double-signing or attesting to conflicting blocks are slashed.
Selection weighting matters. Holding more stake means more chances to propose, which is why the largest operators earn proportionally more.
Proof of Stake vs Proof of Work
| Proof of Stake | Proof of Work | |
|---|---|---|
| Who adds blocks | Validators selected by stake | Miners solving a computational puzzle |
| Cost to participate | Capital locked as collateral | Hardware and electricity |
| Energy use | Minimal | High by design |
| Penalty for cheating | Stake destroyed through slashing | Wasted electricity |
| Attack cost | Acquiring and risking a large share of stake | Out-computing the network |
| Used by | Ethereum, Solana, Cardano, Avalanche | Bitcoin, Litecoin, Dogecoin, Monero |
The scale of Ethereum's stake
Roughly 39.7 million ETH was staked by mid-June 2026, about 32% of circulating supply, across more than 1.24 million validators.
That collateral is the security budget. Attacking the network by controlling a third of validators would mean acquiring tens of billions of dollars of ETH and then risking it. Any attack would be slashed, and it would likely collapse the value of the asset being attacked.
By mid-2026, native staking APR had compressed to around 2.78%, with MEV rewards adding roughly 10% to 30% on top. As more ETH stakes, the yield falls, since the same issuance divides across more participants.
Slashing, and what actually triggers it
Slashing is the enforcement mechanism, and it is considerably narrower than most people assume when they first hear that validators can lose their stake for misbehaving on the network.
Slashable offenses: proposing two different blocks for the same slot, or signing two conflicting attestations. These are protocol-level attacks, and they cost a meaningful portion of stake plus forced exit from the validator set.
Not slashable: ordinary downtime. A validator that goes offline misses rewards and pays small inactivity penalties, but is not slashed. The distinction matters because it means honest operators with unreliable internet are not at risk of losing their principal.
Slashing events on Ethereum have been rare, and most have been caused by misconfiguration rather than malice.
The staking centralization debate
Proof of Stake has a criticism its defenders acknowledge: capital concentrates.
Roughly a quarter of all staked ETH sits with Lido. In May 2025, the Pectra upgrade raised the maximum effective stake per validator from 32 ETH to 2,048 ETH, which lets large operators consolidate. Some argue this reduces the validator count in ways that increase concentration risk.
Against that, Proof of Work concentrated too, with three mining pools producing over half of Bitcoin's blocks by mid-2026. Under economic pressure, both mechanisms tend toward concentration. Neither has solved it.
The four ways to participate in staking
- Solo staking. Run your own validator with 32 ETH. Full rewards, full slashing exposure, real technical work.
- Liquid staking. Deposit any amount with a protocol like Lido and receive a tradeable token representing your position. Roughly 10% fee, plus smart contract risk.
- Exchange staking. The platform stakes on your behalf. Simplest, lower yield, counterparty risk.
- Restaking. Redeploy staked ETH to secure other services for additional yield and additional slashing conditions.
Each moves the risk somewhere different rather than removing it.
Where mb.io fits
Proof of Stake secures the network. mb.io is a regulated spot exchange, where you buy, sell, and swap assets and own what you hold.
mb.io is backed by MultiBank Group, a financial institution founded in 2005 that serves more than 2 million clients across 100+ countries.
- Regulated by VARA in the UAE and AUSTRAC in Australia
- 10/10 security score from Hacken, an independent blockchain security auditor
- Institutional-grade MPC custody powered by Fireblocks, with segregated client funds
- A curated list of assets, so you're not sorting through thousands of tokens to find the ones worth trading
- Buy, sell, and swap in three steps, from sign-up to purchase
- 24/7 multilingual client support
Open your account and start trading on mb.io.
Frequently asked questions
What is Proof of Stake in simple terms?
A way for a blockchain to agree on valid transactions where participants lock up coins as collateral. Honest validators earn rewards. Dishonest ones lose part of their stake.
How is Proof of Stake different from Proof of Work?
By requiring electricity and hardware, Proof of Work makes attacks expensive. By requiring the attacker to risk their own capital, Proof of Stake does the same. Stake uses a fraction of the energy.
When did Ethereum switch to Proof of Stake?
15 September 2022, in an upgrade called the Merge. Energy consumption fell by roughly 99.95%.
What is slashing in Proof of Stake?
The penalty for protocol-level attacks such as double-signing or conflicting attestations. Part of the validator's stake is destroyed and the validator is forced out. Ordinary downtime is penalized but not slashed.
How much ETH do I need to stake?
32 ETH to run your own validator. Liquid staking protocols and exchanges accept any amount, at the cost of fees and additional risk.
Is Proof of Stake more centralized than Proof of Work?
Both mechanisms concentrate under economic pressure. Roughly a quarter of staked ETH sits with Lido. In mid-2026, three mining pools produced over half of Bitcoin's blocks. Neither mechanism has solved it.
Which cryptocurrencies use Proof of Stake?
Ethereum, Solana, Cardano, Avalanche, Polkadot, and most networks launched since 2018. Bitcoin, Litecoin, Dogecoin, and Monero remain on Proof of Work.
Does Proof of Stake pay yield?
Validators earn newly issued tokens plus fees. On Ethereum that ran near 2.78% APR in mid-2026, rising to 4% or 5% with MEV rewards. The yield is denominated in the staked asset, so its dollar value moves with the price.
