Effective Proof-of-Stake is Harmony’s version of the Proof-of-Stake consensus mechanism that aims for both security and decentralization.
Harmony has introduced its own improvised version of the Proof of Stake consensus mechanism, which uses random state sharding to ensure decentralization. The purpose is to prevent the centralization of power by large stakeholders on the network.
The proof of stake consensus mechanism is a way for new blocks to be produced and prevents the double-counting issue.
The idea is that people who hold cryptocurrencies can stake them in order to validate transactions and get rewards.
Proof-of-stake is an alternative to proof-of-work, which requires miners to solve difficult problems in order to produce new blocks. Unlike proof of work, the difficulty of building a block on a proof of stake network increases with the number of coins staked by the validator.
For example, if someone has 1% of total network coins staking, then they would be expected to get 1% of all validation rewards.