A consensus algorithm that dictates the rules by which transactions are validated on the blockchain and how it’s governed. Participants can lock-up tokens (stakes) and the protocol will randomly assign one of them the right to validate the next block in order to claim transaction fees. In general, the probability of being chosen is proportional to the amount of tokens you have staked: the more you have, the higher the probability of validating the next block. There are other mechanics typical of a PoS system and different variations of this system. The PoS system is preferable to the Proof-of-Work system because of its low energy consumption.

The consensus algorithm is the core of every blockchain because it establishes the way in which network participants (so-called nodes) agree on the validity of the data entered in the blocks. The Proof-of-Stake algorithm selects validators through those who have the blockchain’s native tokens in staking. Whoever wants to become a validator node therefore has to deposit native blockchain tokens in a wallet suitable for staking and have a constant internet connection. Validators can be chosen based on several criteria, the most common being the amount of tokens being staked, or how long the tokens have been staked, or a random function. Some blockchains set a minimum number of cryptocurrencies that must be staked, others do not. The difference in these criteria results in variations of PoS such as Delegated Proof-of-Stake or Pure Proof-of-Stake. 

The stake, the amount of cryptocurrencies being staked, functions as a guarantee placed by the node for the proper performance of its work as a validator. If a node were to make a mistake or engage in fraudulent activity, it would lose all of its staked tokens (slashing). 

Proof-of-Stake is considered to be the most decentralised consensus mechanism, since it requires fewer technical barriers to participate in the network, nodes are more distributed, and security is consequently higher. One criticism of PoS is that it benefits large holders who, by having more cryptocurrencies staked, are selected more often to validate blocks and earn incentives. However, the size of the stake is an incentive to do the validation work correctly and frequently. The higher the stakes, the higher the risk of losing them when validation mistakes are made.

Correlated words


A Testnet is a trial blockchain network used for testing new applications and features, offering a risk-free environment for development.

Mining difficulty

Mining difficulty reflects the complexity of the cryptographic problems that must be solved to mine a block in networks like Bitcoin.

Layer 2

Layer 2 protocols operate on top of an existing blockchain to enhance network scalability and efficiency, improving transaction speeds.


Unspent Transaction Output (UTXO) is the amount of cryptocurrency left after a transaction, available for future transactions.

Account Model

In the Ethereum blockchain, the Account Model represents user accounts with associated wallet addresses, forming the decentralised ledger.


Royalties are payments made to the creators of NFTs for each subsequent sale, providing ongoing compensation.

Multisig Wallet

A Multisig (Multi-signature) wallet requires multiple private keys to authorize cryptocurrency transactions, enhancing security.

Custodial Wallet

A Custodial wallet is a cryptocurrency wallet where third parties maintain custody of the owner's private keys.

Seed phrase

A Seed Phrase is a series of 12 or 24 words used to recover access to a cryptocurrency wallet, acting as a backup tool.

Non custodial wallet

A non-custodial wallet is a cryptocurrency wallet where the owner maintains complete control over their private keys.

Fan Token

Fan Tokens are specialised utility tokens that enable sports teams to engage and interact with their fan base.


Minting is the process of creating and registering new digital assets, such as tokens or NFTs, on a blockchain.

NFT Domains

NFT Domains are unique, decentralised internet domains, managed by smart contracts and recorded on a blockchain.


The Metaverse is a digital platform offering immersive, shared experiences in a virtual online environment, often integrating blockchain.

Delegated Proof-of-Stake

Delegated Proof-of-Stake is a system where stakeholders transfer their staking power to trusted validators who maintain the network.

Pure Proof-of-Stake

Pure Proof-of-Stake is a consensus model where validators are selected randomly and anonymously, using Verifiable Random Functions (VRF).

Liquid Proof-of-Stake

Liquid Proof-of-Stake is a variant of Proof-of-Stake where staked tokens remain liquid and readily accessible for transactions.


The Stake represents the total cryptocurrency users are currently staking within a blockchain network to gain rewards.

Staking Pool

A Staking Pool combines the cryptocurrencies of several individuals to increase collective staking power and potential rewards.

Cold Staking

Cold Staking involves securing cryptocurrency in a cold wallet, not connected to the internet, for staking purposes to enhance security.


Blockchain technology, based on cryptography, enables the decentralized and uncensored execution of transactions across various sectors.

Genesis Block

The Genesis Block, often called Block 0, is the inaugural block of a blockchain, serving as the foundation of the entire chain.

Block Height

Block Height refers to the total number of blocks in a blockchain, counted from the genesis block to the most recent block.


The Network in blockchain refers to the interconnected system of computers, or nodes, supporting the operations of a cryptocurrency.

Transactions per second (TPS)

Transactions per second (TPS) measures the processing speed of a blockchain network, indicating its efficiency and scalability.


A Transaction is a formal agreement involving the exchange of assets, value, or data between digital or physical entities.


In blockchain, Shard refers to a network subdivision that enhances transaction processing efficiency and overall network scalability.


Proof-of-work is a blockchain consensus mechanism relying on miners' computational power to validate transactions and create blocks.


A Node refers to a computer connected to a blockchain network, playing a crucial role in processing and validating transactions.


Off-chain transactions refer to activities conducted outside the blockchain, enhancing speed and reducing congestion.


On-chain activities are those executed and recorded on the blockchain, ensuring transparency and permanence of the data.

Mining Pool

A Mining Pool is a collective that combines multiple miners' computational power to enhance cryptocurrency mining efficiency.


Mining involves solving complex cryptographic challenges to create new blocks on a blockchain, earning cryptocurrency rewards.

Consensus Mechanism

A Consensus Mechanism is a decentralised method for validating transactions on a blockchain, crucial for maintaining network integrity.


A Hash is a cryptographic function uniquely identifying each blockchain block, ensuring data integrity and security.


In cryptocurrency, Governance refers to the systems and rules guiding the operation and decision-making of projects and blockchains.


A Fee is a charge incurred for executing financial transactions, often seen in trading, banking, and service provisions.

Double Spending

Double Spending is a risk in digital payment systems, where the same amount might be fraudulently spent twice without proper safeguards.


A Denial of Service (DoS) is a cyber attack aimed at making a network or service unavailable, disrupting normal operations.


Distributed Ledger Technologies (DLT) are based on a decentralised and immutable ledger of transactions, shared across a network.


A system is called Decentralised when it is governed by consensus among participants without a central authority or hierarchy.

Cold Wallet

Wallets that are not connected to the internet.


A Bridge in blockchain technology enables the transfer and interaction of assets across diverse blockchain platforms.

Financial Bubble

A Financial Bubble is an economic cycle characterised by the rapid escalation of asset prices beyond their intrinsic values.

Blockchain Explorer

Blockchain Explorer is a software tool that enables users to view all transactions and exchanged data on a specific blockchain.


A Block is a collection of encrypted transactions, which, linked with other blocks, forms the entire structure of a blockchain.


ASICs are specialized devices designed for mining specific cryptocurrencies, offering enhanced efficiency in computational tasks.


Interoperability in blockchain refers to exchanging data with other platforms, including different blockchain types and off-chain systems.

51% Attack

A 51% Attack occurs when a node or group of nodes tries to gain majority control over a blockchain network, threatening its integrity.

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