Proof-of-stake (PoS) protocols are a class of consensus mechanisms for blockchains that work by selecting validators in proportion to their quantity of holdings in the associated cryptocurrency.
[3] For the blockchain to remain secure, it must have a mechanism to prevent a malicious user or group from taking over a majority of validation.
[8] The low amount of computing power involved allows a class of attacks that replace a non-negligible portion of the main blockchain with a hijacked version.
The PoS schemes enable low-cost creation of blockchain alternatives starting at any point in history (costless simulation), submitting these forks to eager validators endangers the stability of the system.
[12] Bribery attack, where the attackers financially induce some validators to approve their fork of blockchain, is enhanced in PoS, as rewriting a large portion of history might enable the collusion of once-rich stakeholders that no longer hold significant amounts at stake to claim a necessary majority at some point back in time, and grow the alternative blockchain from there, an operation made possible by the low computing cost of adding blocks in the PoS scheme.
[14] The outline of the BFT PoS "epoch" (adding a block to the chain) is as follows:[15] The scheme works as long as no more than a third of validators are dishonest.
[16] In the liquid PoS anyone with a stake can declare themselves a validator, but for the small holders it makes sense to delegate their voting rights instead to larger players in exchange for some benefits (like periodic payouts).
[19][20][21] In September 2022, Ethereum, the second-largest cryptocurrency, switched from PoW to a PoS consensus mechanism,[22] after several proposals[23][24] and some delays.
[30][31] In 2021, a study by the University of London found that in general the energy consumption of the proof-of-work based Bitcoin was about a thousand times higher than that of the highest consuming proof-of-stake system that was studied even under the most favorable conditions and that most proof of stake systems cause less energy consumption in most configurations.
[32] In January 2022, Erik Thedéen, the vice-chair of the European Securities and Markets Authority, called on the EU to ban the PoW model in favor of PoS because of the latter's lower energy consumption.