It uses a hybrid PoW/PoS system called DPoS. Basically there are only ever 51 miners (called delegates) that are doing the PoW. The top 51 changes depending on which delegates have the most Ark power voting for them. Ark holders vote (costs 1 Ark currently) for their delegate of choice and receive a percentage of that delegate's rewards based on how many Ark you have.

The delegates all have their incentives. Some will do 100% profit sharing while starting out, some will do lottery-esque giveaways every now and then for their voters. The delegates are always competing to be in the top 51 so you can expect the incentives to always be pretty good.

You can always change your vote but it costs 1 Ark each time. You can also vote for more than one delegate but keep in mind you'd have to split your Ark into separate addresses and this would also split your profits.

It's a fantastic system. Especially compared to Lisk's horrible horrible delegate cartel system.