Proof of Stake (PoS)

On September 15th, 2022 Ethereum transitioned from Proof of Work to Proof of Stake (POS), also known as “The Merge”.
Proof of Stake (PoS) is a proposed consensus mechanism for the Ethereum network, which would replace the current Proof of Work (PoW) consensus mechanism used by Ethereum and many other blockchain networks. To become a validator in a PoS network such as Ethereum, one must stake a certain amount of cryptocurrency as collateral. For Ethereum, the current requirement is to stake 32 ETH.
Under PoS, validators (also known as "stakers") are chosen to create new blocks and validate transactions based on the amount of cryptocurrency they hold and are willing to "stake" as collateral. In other words, the more cryptocurrency a validator stakes, the greater their chance of being selected to create a new block and earn rewards.
One of the main advantages of PoS over PoW is that it is less resource-intensive and more environmentally friendly, as it does not require the same level of computational power and energy consumption as PoW. PoS also has the potential to be more decentralized and secure, as it can reduce the influence of large mining pools and other centralized actors on the network.

Visual Representation

+--------------+
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| Stakers |
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+--------------+
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| New block
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v
+--------------+
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| Blockchain |
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In PoS, stakers are chosen to validate new blocks based on their stake or ownership of the cryptocurrency. This eliminates the need for resource-intensive mining and reduces the energy consumption of the network. Stakers are also incentivized to act in the best interest of the network, as their stake can be penalized if they behave maliciously.
Overall, PoS is expected to be more energy-efficient, scalable, and secure than PoW, while enabling a wider range of use cases and applications on the blockchain.
Proof of Stake (PoS) introduced two new levels of finality that developers should consider when requesting data from the network: safe and finalized. Here's an overview of all "block tags" and their meanings:
  • earliest: The lowest numbered block available on the network. Intuitively, this is the first block created.
  • finalized: The most recent block that has been accepted by at least two-thirds of validators and is therefore crypto-economically secure. Typically finalized in two epochs (64 blocks), it cannot be reorganized outside of manual intervention driven by community coordination. This block is very unlikely to be reorganized.
  • safe: The most recent block that is crypto-economically secure, typically safe in one epoch (32 blocks). Like the finalized block, it cannot be reorganized outside of manual intervention driven by community coordination. This block is "unlikely" to be reorganized.
  • latest: The most recent block in the canonical chain observed by the client, which may be reorganized out of the canonical chain even under normal conditions. Intuitively, this is the most recent block observed by the client.
  • pending: A sample next block built by the client on top of the latest block and containing a set of transactions usually taken from the local mempool. Intuitively, these are blocks that have not yet been mined.
|-------- earliest ---------------|
|-------- finalized --------------|
|-------- safe -------------------|
|-------- latest -----------------|
|-------- pending ----------------|
To remember the differences between the block tags, you can think of them in the order of oldest to newest block numbers: earliest ≤ finalized ≤ safe ≤ latest ≤ pending. By understanding the different levels of finality and their meanings, developers can ensure that they are accessing the most accurate and up-to-date data from the Ethereum network.

HOW A TRANSACTION GETS EXECUTED IN ETHEREUM POS

Additional reading: