Proof of service (Proof of Service) is a concept in which part of the network's reward goes not to miners or block validators but to special nodes that perform additional service functions. The idea is to encourage participants who support important infrastructure: speeding up payments, increasing the privacy of transactions, and other services that make the network more convenient and faster.

This approach first became widely known thanks to the Dash network and its masternodes. To launch such a node, a participant must lock a fixed amount of coins as collateral. These funds are not burned and remain with the owner, but they must stay immobile: as soon as part of the collateral is spent, the node loses its status and stops receiving a reward. In this way the system ensures that a masternode operator is economically interested in honest and uninterrupted operation.

Functions of service nodes

• participation in the anonymization and mixing of transactions;
• ensuring almost instant confirmation of payments;
• supporting governance and voting within the network.

Thus, proof of service adds a layer of useful services to standard consensus and distributes the reward among those who actually support the operability and functionality of the network.