How Does Proof-of-Stake (PoS) Incentivize Validators to Act Honestly?
Proof-of-Stake (PoS) incentivizes honest behavior through economic mechanisms, primarily "staking" and "slashing." Validators must lock up a significant amount of the native cryptocurrency (the stake). If they act honestly (validating and proposing blocks correctly), they earn rewards.
If they attempt to cheat (e.g. double-signing or committing invalid transactions), their staked funds are "slashed," or partially destroyed, resulting in a substantial financial loss.
Glossar
Native Cryptocurrency
Genesis ⎊ A native cryptocurrency, fundamentally, represents the foundational token within a specific blockchain network, intrinsically linked to the protocol’s operational consensus and economic incentives.
Block Proposal
Generation ⎊ Block Proposal is the act performed by a designated validator or miner to construct a candidate block containing a specific ordered set of valid transactions, along with the necessary cryptographic proof of work or stake.
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.