# Proof of Stake A consensus mechanism in which the right to validate transactions and add blocks is allocated by **stake** — the amount of the native token a participant locks up as collateral — rather than by the computational work of [[Crypto Mining]]. Validators who behave honestly earn rewards proportional to their stake; validators who cheat have their staked tokens "slashed." Proof of stake consumes a tiny fraction of the energy of [[Proof of Work]] because security comes from capital at risk rather than electricity burned. Ethereum, the largest smart-contract platform, switched from PoW to PoS in the 2022 "Merge," cutting its energy use by roughly 99%. ## Why the term matters Proof of stake resolves crypto's biggest external liability — its carbon footprint — but it does so by importing a new set of problems that this vault should track. First, it concentrates a securities-like quality into the asset: staking pays a yield, which makes a staked token look and behave like an interest-bearing financial product, sharpening the SEC's long-running question of whether such tokens are unregistered securities. Much of the industry's political spending (see [[Crypto Super PACs]]) has been aimed precisely at heading off that classification. Second, PoS arguably trades one centralization risk for another. [[Proof of Work]] concentrates power among those with the cheapest electricity; proof of stake concentrates it among those who already hold the most tokens — "the rich get richer" is a structural feature, since rewards scale with stake. That tension sits awkwardly with crypto's [[Decentralization]] rhetoric. The factional split is real: Bitcoin maximalists deride PoS as unbacked and plutocratic, while the Ethereum-and-everything-else world treats PoW as obsolete ecological vandalism. Most tokens (see [[Token vs Coin]]) and [[Memecoin]]s — including the assets in the [[$TRUMP Memecoin Universe]], which run on Solana — live on proof-of-stake chains. ## See Also - [[Proof of Work]] — the energy-intensive alternative - [[Crypto Mining]] — what PoS replaces - [[Token vs Coin]] — most tokens run on PoS chains - [[Crypto Super PACs]] — the fight over securities classification