How Does PoS Prevent Centralization despite Validators Needing Large Stakes?
Pure Proof-of-Stake attempts to prevent centralization through mechanisms like randomized validator selection, which limits the power of large stakers in any single round. Furthermore, some PoS systems enforce limits on the maximum stake that can be pooled or use complex reward distribution schemes that favor smaller stakers.
The ability for small holders to delegate their stake to a pool also increases participation and decentralization.
Glossar
Validators
Role ⎊ Validators are the network participants, typically in Proof-of-Stake systems, responsible for verifying the correctness of new transactions and proposing new blocks to be added to the blockchain ledger.
Reward Distribution Schemes
Mechanisms ⎊ Reward distribution schemes, within cryptocurrency and derivatives, represent the protocols governing the allocation of generated value to participants ⎊ holders, liquidity providers, or stakers ⎊ often incentivizing specific network behaviors.
Centralization
Architecture ⎊ Centralization, within cryptocurrency, options trading, and financial derivatives, denotes a concentration of control and decision-making power, often manifested through centralized exchanges or custodians.