Proof-of-Stake
A consensus mechanism where validators stake ETH to secure the Ethereum network and earn rewards.
What is Proof-of-Stake?
Proof-of-Stake (PoS) is Ethereum’s consensus mechanism, fully adopted after The Merge in 2022, replacing proof-of-work. In PoS, validators stake a minimum of 32 ETH to participate in securing the network by proposing and attesting to blocks. Validators are chosen pseudo-randomly based on their stake and other factors, earning rewards in ETH for their contributions. PoS is more energy-efficient than proof-of-work and supports Ethereum’s scalability by enabling faster transaction processing and finality, with penalties (slashing) for malicious or offline validators.
Related Terms
Ethereum Lightweight Client
An Ethereum client that operates without storing the full blockchain or validating blocks and transactions, functioning primarily as a wallet for creating and broadcasting transactions.
Order Book
A real-time electronic list of buy and sell orders for a digital asset, organized by price level.
Active Management Burden
The ongoing requirement for liquidity providers to monitor and adjust positions in DeFi to optimize returns and mitigate risks.
Concentrated Liquidity (Uniswap)
Uniswap concentrated liquidity is a feature of Uniswap V3 that allows liquidity providers to allocate capital within specific price ranges of a token pair, increasing capital efficiency and potential returns compared to traditional AMM models.
Impermanent Loss(IL)
The unrealized financial loss experienced by a liquidity provider in a decentralized exchange (DEX) trading pair when the price of one token diverges significantly from the other, compared to holding the tokens outright.
Ethereum Wallet
A software or hardware tool that manages Ethereum accounts, enabling users to store, send, and receive ETH or tokens.