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.