Proof of Stake

What is staking?

Staking is the process of securing the network via locking up your tokens. It serves the same purpose as mining in a Proof-of-Work network such as Bitcoin.

Validator nodes validate transactions and the staked tokens act as an economic incentive for stakers to play by the rules of the protocol.

Since validators are anonymous to make the network decentralized and resilient to attacks from the outside, Neon employs Proof-of-Stake to prevent sybil attacks. A sybil attack is an attack, where a malicious actor runs a large number of validators to allow them an unsafe amount of influence over the network. Proof-of-Stake makes it costly to set up validators and allows the network to punish validators for malicious behavior, increasing the costs of attacks.

Neon requires validator nodes to lock-up at least 1,000,000 NEON (Neon's native token) to prevent sybil attacks.