Proof of stake and staking basics

Proof of stake secures a blockchain with locked-up coins instead of mining machines. Ethereum has used it since September 2022. This lesson explains how it works and what staking involves.

Collateral instead of electricity

In proof of work, miners spend electricity to earn the right to add a block. In proof of stake, participants called validators lock up coins as collateral. That collateral is their stake.

On Ethereum, a validator needs at least 32 ETH. An honest validator earns rewards. A dishonest one loses part of its stake.

How blocks are made

Time on Ethereum is divided into 12-second slots.

In each slot, one validator is chosen at random to propose a block.
A committee of other validators checks the block and votes on it.
When votes representing two-thirds of all staked ETH agree, earlier blocks become final.

To reverse a final block, an attacker would have to lose at least one-third of all staked ETH. That is the deterrent, in the way electricity cost is for Bitcoin.

Rewards and penalties

Rewards. Validators earn new ETH for proposing and checking blocks. The rate changes with how much ETH is staked. In October 2026 it was about 2.5% a year.
Penalties. A validator that goes offline misses rewards and loses small amounts.
Slashing. A validator that provably cheats, for example by signing two conflicting blocks, has part of its stake destroyed and is removed.

Rewards are paid in ETH. If the price of ETH falls, the value of your stake and rewards falls with it.

Ways to stake

Method	What you need	Who holds the keys
Run your own validator	32 ETH, hardware, technical skill	You
Staking as a service	32 ETH	You keep the withdrawal key. An operator runs the validator
Pooled or liquid staking	Any amount	A smart contract or pool
Through an exchange	Any amount	The exchange

Each step down the table is easier, and each adds something you must trust. Pools add smart contract risk. An exchange adds the risk that the company fails or freezes withdrawals.

Leaving is not instant. Staked ETH is withdrawn through a queue, which can be slow when many people exit at once.

Trade-offs against proof of work

Proof of stake cut Ethereum's energy use by about 99.95%. It also removed the need for specialised machines.

Critics note that it is younger and more complex than proof of work. They also point out that large pools and exchanges control a big share of the stake. More than a third of all ETH was staked in October 2026.