Proof of Stake (PoS) is an upgrade from Ethereum 1.0’s current Proof of Work consensus model and allows for improved security and scalability. PoS is a consensus mechanism that relies on validators and staked ETH for the continuation of blocks on the blockchain, and is necessary for sharding. Validators are people who elect to continue the blockchain by depositing (or “staking”) 32 ETH into the deposit contract. On a continuous basis, validators are randomly selected from the pool of all validators to be given the opportunity to create the next block. Should a validator successfully validate a block, they will receive an ETH reward. If a validator attempts to compromise the truthful continuation of the blockchain, their deposit will be ‘slashed’ – meaning they will lose some or all of their 32 staked ETH.
A Proof of Stake mechanism offers more crypto-economic security compared to the more abstract disincentive of losing the cost associated with electricity. Rather than investing in an enormous mining facility to defray the cost of electricity to mine blocks in PoW, staking on Ethereum 2.0 will only require a consumer laptop (some software clients aim to be lightweight enough to run on a cell phone, thus reducing the barrier to entry to participating in the consensus process, consequently increasing the decentralization of the network).
The Proof of Stake Beacon Chain is now live, with 222,052 validators staking a combined 7,105,596 ETH (as of Sept 1, 2021).
More information about Proof of Stake: The State of Staking (August 2021), Codefi Staking