What is Proof of stake?

Proof of stake is a way for a blockchain to agree on its next block without mining: validators lock up the network's own asset as a bond, are chosen to propose and confirm blocks in proportion to that bond, earn rewards for honest work and lose part of the bond, through slashing, for provable misbehaviour. Ethereum switched to it in 2022; Solana, TON and most newer chains use some version of it.

The economics replace electricity with capital. Under proof of work, security comes from the cost of hardware and energy an attacker would need; under proof of stake, from the value of the stake an attacker would have to acquire and would then destroy by attacking. Both make attacks expensive; they distribute the cost, and the rewards, very differently.

For a holder, proof of stake turns the asset into something that earns. Staking directly means running or delegating to a validator and locking the asset for a period; liquid staking issues a token that represents the staked position and can be traded or used in DeFi while the underlying keeps earning. Either way the reward is paid in the asset itself.

The risks are specific: slashing if your validator misbehaves, lock-up periods that prevent selling in a crash, and, with liquid staking, the extra layer of a token that can trade away from the value it represents. None of these show on a simple balance, which is why staked positions need reading as positions rather than as coins.

A tracker has to count staked assets as exposure to the underlying, with the yield attached, and not as a separate coin. TrueHold counts stake accounts into the SOL position on Solana, reads staked validators and liquid staking receipts on other chains, and shows the rates on them next to the plain balances.