Proof of Stake is a validation scheme used by some protocols to incentivise network validators to behave honestly. It is an alternative scheme to Proof of Work.
With Proof of Stake, each validator is required to put up a certain amount of tokens. For example, Ethereum validators are required to put up 32 ETH (about $64,000). A proposer is then selected (randomly, for example) to add the next block of transactions to the blockchain. Validators are also selected. The proposer will receive a block reward for adding the next block once the validators have verified that the proposed block is valid. If the block is rejected by the validators, then the proposer will lose part of their stake in a process called “slashing”.
One of the main concerns with Proof of Stake is the the potential for centralisation. It is possible for a small number of entities to gain control of the validation process as long as they have access to enough capital.
Ethereum moved from Proof of Work to Proof of Stake in September 2022.