Consensus & Mining
Beginner
Updated 11/26/2025
What is
Proof-of-Stake?
A consensus mechanism where validators stake tokens to secure the network, contrasted with Ergo's Proof-of-Work approach.
Proof-of-Stake (PoS) is a consensus mechanism where validators lock up tokens as collateral to participate in block production. While more energy-efficient than PoW, PoS has centralization concerns (rich get richer), weaker censorship resistance (validators can be identified and pressured), and often involves insider token allocations.
Key Points
- Validators stake tokens as collateral
- More energy-efficient than PoW
- Rich-get-richer dynamics
- Validators can be identified and pressured
- Often combined with VC allocations
- Ergo chose PoW for stronger decentralization
Use Cases
1
Understanding consensus tradeoffs
2
Comparing PoW vs PoS security
3
Evaluating chain decentralization
4
Assessing censorship resistance
Technical Details
In PoS, validators are selected to produce blocks based on their stake. Slashing mechanisms punish misbehavior. However, large stakers earn more rewards, increasing their stake over time. Validators are identifiable, making them targets for regulation or coercion.
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Frequently Asked Questions
Questions about Proof-of-Stake
Common questions about this topic
How to provide liquidity on Ergo?
On Spectrum Finance, select a pool, deposit equal value of both tokens, and receive LP tokens representing your share. You earn a portion of all trading fees. Withdraw anytime by returning LP tokens. Be aware of impermanent loss if token prices diverge significantly.
How-to
DeFi
How to build DeFi on Ergo?
Building DeFi on Ergo starts with understanding the eUTXO model and ErgoScript. Unlike account-based chains, Ergo's box model provides deterministic execution, no MEV by design, and predictable gas costs. Use Oracle Pools for price feeds, and leverage existing patterns from Spectrum Finance and SigmaUSD.
How-to
DeFi
How to get started with Ergo?
Start by getting a wallet (Nautilus for browser, Terminus for mobile). Back up your seed phrase securely offline. Get some ERG from an exchange (Gate.io, KuCoin) or DEX (Spectrum). Make a test transaction. Then explore: try DeFi on Spectrum, check out NFTs, or dive into the technology if you're a builder.
How-to
Getting Started
Is Ergo a good investment?
This is not financial advice. Ergo has strong fundamentals: fair launch (no VC dump risk), innovative technology (eUTXO, Sigma Protocols, NiPoPoWs), active development, and a cypherpunk ethos. It's a smaller market cap project with higher risk/reward than established chains. Research thoroughly, understand the technology, and never invest more than you can afford to lose.
Comparison
Getting Started