My understanding of proof of work is that basically (miners/CPUs provide power to write transactions on the blockchain) whereas Proof of stake (is when we hold a certain currency and lock it into the systemso liquidity increases).Please correct me if im wrong.
You understand correctly. If you want to stake BTC, you can use the Lightning Network. It's not a PoS consensus algorithm but it is a sort of staking mechanism.
Each LN channel has BTC locked in a smart contract so it is "staked" in the channel. The more channels you have open and the more connected your node becomes, the more BTC you can potentially earn. It's important to understand that the same rules apply to everyone on the lightning network. Those with more at stake don't have more "votes" than smaller stakers but they absolutely stand to earn more BTC if it is well allocated.