What is LUNA and how to stake it?
What is LUNA and how to stake it?
LUNA is the native staking token in Terra Protocol. The primary function of LUNA is to protect the integrity of Terra mechanisms by locking value within the Terra ecosystem through staking. The Terra network is based on the Delegated Proof-of-Stake consensus algorithm, where miners (validators) need to stake a native cryptocurrency LUNA to mine Terra transactions. Delegation mechanism allows anyone who wants to support the network and earn staking rewards to delegate to the chosen validator. Staking rewards are first distributed to validators who take a commission for providing their operations and then are withdrawn individually by delegators.
If you want to learn more about Terra, read our Terra Ecosystem Overview: A Guide for Newcomers.
LUNA can exist in three states:
Source: Terra Docs
- Unbonded: tokens are not staked and can be freely transacted without any restrictions.
- Bonded: tokens are staked and blocked by the network, they cannot be used for any other purpose, except staking that delegators get rewards for. At any time, LUNA tokens can be transferred to the Unbonding state.
- Unbonding: tokens are instructed to be undelegated. Delegators no longer receive rewards and cannot complete transactions until the end of the unbonding period, which is 21 days.
Ready to stake with Everstake?
Everstake is a reliable staking provider trusted by more than 465,000 users from all over the world. Our highly experienced technical team supports the infrastructure that you can rely on. We use bare-metal servers distributed around the globe, have backup nodes for any emergencies, and dedicated DevOps monitoring the network 24/7.
By choosing Everstake as a validator, you get confidence that your assets are safe. High-performance servers, broadband channels, and advanced network topology allow us to show 100% uptime and provide continuous rewards.
In order to stake LUNA you need to download the Terra Station app, the official desktop wallet for holding Terra assets, or check out the web version station.terra.money to use with the Ledger. More info on delegating LUNA using the Ledger hardware wallet can be found here. There are official binaries for Windows, MacOS, and Linux. Launch the Terra Station and follow the instructions on the screen to create a new wallet or use an existing one.
Once the wallet is connected, and you have some LUNA, follow the steps below:
1. Go to the Stake tab.
2. Type everstake in the search bar.
3. Click on the everstakeone name and open the page with validator details. To delegate LUNA click on the Delegate button.
4. Enter the amount you want to delegate. Make sure to leave enough coins to pay the fee for subsequent transactions. You can choose the coin you want to pay with for transaction fees in the drop-down list.
5. Enter the password for your wallet and press Submit.
That’s it, congratulations! Now you are staking with Everstake. Later, on the validator page you will be able to see your rewards.
If you have any additional questions, please check our FAQ page.
Good to know
Is there a minimum amount of LUNA to stake?
You can stake any amount of LUNA as there is no minimum requirement for delegators. The only thing worth mentioning is that the amount must be within 6 decimal points.
How much can I earn by staking LUNA?
The size of your rewards is determined by the size of your stake. You will receive ~8% annually minus the validator’s commission, which is calculated as a percentage of the block rewards. For example, if you stake 100 LUNA with 8% APY you will get 8 LUNA minus 0,8 LUNA (a 10% commission from 8 LUNA) that is overall 7,2 LUNA per year.
Annualized staking yield for LUNA is variable and based on tax rewards, oracle rewards, gas, MIR, and ANC airdrop rewards, and the latest prices of LUNA. You can check the current staking return on the Dashboard. To open it, click on the Terra Station in the upper left corner.
It is also worth mentioning that LUNA staking rewards consist of a mixture of LUNA and a variety of stablecoins. You will also get free portions of ANC, MIR and airdrops of some future protocols.
When will I start earning rewards and how to claim them?
Right after your delegation is complete, you will get payouts every block [~7 sec]. You can check your rewards in the Wallet or Stake tabs in the Terra Station. All rewards become available after their withdrawal, you can do this at any time by clicking the Withdraw rewards button.
Remember to keep some funds in your account when delegating because you will have to pay a small fee to withdraw rewards.
How to claim ANC and MIR airdrops?
LUNA stakers are eligible for free ANC and MIR airdrops. To claim your rewards, download the Terra Station Chrome extension, go to Anchor protocol and Mirror protocol websites and connect your Terra Station Wallet. If you are eligible for airdrops, you will see the amount of ANC and MIR tokens that you can claim.
Remember that you must have some UST to pay transaction fees, otherwise, you will not be able to claim airdrops.
Tip: Even though there is no minimum amount of LUNA that you have to stake to get airdrops, please keep in mind that airdrops are given pro-rata to the staked amount of LUNA. If this amount is too small, the commission for claiming rewards will exceed the rewards themselves.
Is it secure to delegate LUNA tokens?
Please keep in mind that staked LUNA never leaves the possession of the delegator. Even though it can’t be traded freely, staked LUNA is never owned by a validator. Therefore, it is safe to delegate LUNA.
However, when choosing a validator, you should take into account its uptime and the equipment used since your profitability will depend on these factors. If the validator misbehaves, its stake will be penalized hurting both the validator and those who stake with it. For example, the slash for double signing will be at 5%, and if the validator experiences significant downtime or does not participate in the oracle process, the slash will be at 0.01%. Thus, it is important to delegate tokens only to reliable validators like Everstake.
Are there any other risks while delegating LUNA tokens?
The main risk is associated with the volatility of LUNA tokens. If the rate significantly decreases and you want to sell tokens urgently, you will not be able to do this as you have to wait 21 days until the end of the unbonding period.
Is it possible to redelegate LUNA to another validator?
Yes, you can easily redelegate without having to wait the 21-day unbonding period.
Choose a new validator on the Stake tab and click the Redelegate button on its page. In the From tab, choose the validator you would like to undelegate from. Please keep in mind that you will not be able to redelegate one more time from the validator receiving the staked LUNA for 21 days.
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