When cryptocurrencies first launched back in 2008, blockchain networks used proof-of-work models to validate transactions and generate new blocks. Over time, programmers realized there might be a better way.
Instead of solving complex puzzles, what if you could validate transactions based on your stake in the network?
If you had a significant stake in a particular blockchain, you would be incentivized to maximize the value of your tokens and keep transactions safe and secure. And your stake could serve as collateral to become a validator.
This is the logic behind proof-of-stake (PoS).
Instead of using miners to validate transactions, PoS blockchains use validators. These validators perform a similar function to miners, in that they legitimize transactions, but there is no computational puzzle required to become a validator.
Rather, validators are qualified by “staking” the native tokens of the blockchain as collateral to keep transactions secure. When a transaction is made, the system will randomly select validators based on their stake and reward them with network transaction fees.