Pos Tokens

Proof of Stake (PoS) is basically getting interest over the amount of tokens you hold. In order to validate blocks or transactions some cryptographic puzzles need to be solved. The cryptographic calculations in PoS are much simpler for computers to solve in comparison to mining rigs: you only need to prove you own a certain percentage of all coins available in a given currency. For example, if you somehow owned 2% of a PoS coin, you’d be able to mine 2% of all transactions across that blockchain.

Interest pay outs / mining rewards often happen in the same tokens you stake but is not necessary.

See also the masternode page. Masternodes are sort of staking wallets on steriods

PoS would be a more fair system than PoW, as technically anyone could become a miner. PoS offers a linear scale regarding the percentage of blocks a miner could confirm, since it’s based on that person’s stake in the cryptocurrency. That means someone with ten times more coins (e.g. - $10,000 vs. $1,000) would only mine ten times more blocks. Under PoW protocols, spending ten times as much money on mining hardware will produce higher computational power logarithmically, allow for more equipment due to the nature of reduced prices when buying in bulk, and might provide further advantages since highly expensive equipment often functions exponentially better than less expensive counterparts.

Switching to PoS could help to encourage more community participation in Ethereum, as well as aid decentralization. Taking mining out of the hands of the few pools of GPU farms doing the bulk of mining, which somewhat resembles an oligopoly, would distribute the work evenly across the network, leading to a more democratized system.