How does proof of stake work?

Stake instead of work

Proof of stake starts from a simple idea. The more someone has invested in a system, the more they want it to succeed, and the less they want to damage it.¹ The stake is often an amount of cryptocurrency, locked so that it generally can't be spent.¹ The bigger someone's share of all the stake, the more likely they are to publish the next block.¹ There is no guessing race, so it doesn't need huge amounts of computing power or electricity.¹

Validators on Ethereum

On Ethereum, the users who stake are called validators.² To become one, a user must deposit at least 32 ETH and run three programs: an execution client, a consensus client and a validator client.^2,3 Until an upgrade called Pectra, a validator could earn on at most 32 ETH. Since Pectra, it can opt in to earn on any balance between 32 and 2,048 ETH.³ Validators check new blocks and sometimes create blocks themselves.²

Slots, epochs and votes

Ethereum splits time into slots of 12 seconds, and groups 32 slots into an epoch.² So an epoch lasts 32 times 12 seconds, which is 384 seconds or 6.4 minutes.^2,4

In every slot, one validator is picked at random to propose a block.² A committee of other validators is also picked at random to vote on it.² These votes are called attestations.² Before voting, validators re-run the block's transactions to check the result.² Every active validator votes once in each epoch, not in every slot.²

If the chosen validator is offline, the slot can go empty.⁵

Rewards and slashing

Validators earn ETH for doing their job.² If they don't take part when called, they miss out on rewards.² If they cheat, some or all of their stake can be destroyed. This is called slashing.² Two actions count as cheating: proposing more than one block in a single slot, and sending votes that contradict each other.² The penalty is bigger when many validators are slashed at around the same time.²

The Merge

Ethereum used proof of work from its launch in 2015.⁴ A separate proof-of-stake chain, the Beacon Chain, started on 1 December 2020.⁴ On 15 September 2022 the two joined in an upgrade called The Merge, and mining ended.⁴ No history was lost.⁴ ethereum.org estimates that The Merge cut Ethereum's energy use by about 99.95%.⁴

Attacks and drawbacks

A 51% attack is still possible: the attacker would need 51% of the staked ETH.² But honest validators could refuse to build on the attacker's chain, and could remove the attacker and destroy its stake.²

ethereum.org lists drawbacks too. Proof of stake is younger and less battle-tested than proof of work, and more complex to build.²