Definition ∞ A stake pool is a collective of cryptocurrency holders who combine their staking power in a Proof-of-Stake network. Participants delegate their tokens to a pool operator, who then uses the aggregated stake to validate transactions and create new blocks. This increases the probability of the pool being selected by the protocol to earn staking rewards, which are then distributed proportionally among the delegators, minus a fee for the operator. Stake pools allow individual token holders with smaller amounts of capital to participate in network security and earn passive income without running their own validator node.
Context ∞ Stake pools are a central component of many Proof-of-Stake blockchains, with news often reporting on their performance, decentralization metrics, and the fees charged by operators. Debates frequently concern the potential for centralization if a few large pools accumulate too much delegated stake. The ongoing development focuses on mechanisms to promote a healthy distribution of stake and incentivize participation across a wider array of pools.
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