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Proof of stake (PoS)
How it works

Proof of stake (PoS)

A way of establishing trust through financial commitment instead of work. This is an alternative to proof of work. Participants put up collateral to participate. Less energy-intensive than PoW.

TradFi equivalent
In traditional finance...
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TradFi equivalent
A margin requirement. A participant puts up collateral before being allowed to trade. The collateral is at risk if the borrower fails to meet their obligations.
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Analogy
In everyday terms...
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Analogy
A security deposit. Before a tenant is trusted with a property, they put money at risk. If they damage the property, they lose the deposit.
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