Monero is powered strictly by Proof of Work. It employs a mining algorithm that has the potential to be efficiently tasked to billions of existing devices (any modern x86 CPU and many GPUs). Monero uses a variant of CryptoNight Proof of Work (PoW) algorithm, which is designed for use in ordinary CPUs and GPUs.
The smart mining feature allows transparent CPU mining on the user's computer, far from the de facto centralization of mining farms and pool mining, pursuing Satoshi Nakamoto's original vision of a true P2P currency.