If you’ve currently got Terra Luna tokens sitting idle on an exchange you may be interested to hear that you can earn rewards through staking. Staking allows you to earn interest from your crypto when you deposit your funds to support the operations of a blockchain network and, in return, you’re rewarded for your contribution.
In this Terra-Luna review and tutorial, I explain how to buy LUNA tokens on the like of Binance Exchange and how to store and stake LUNA to earn rewards on Terra Station with a Ledger hardware wallet.
What is the Terra Protocol?
The Terra Protocol was created in 2018 by a Korean blockchain company called Terraform Labs founded by Daniel Shin and Do Kwon. With the idea to facilitate the mass adoption of crypto by creating digitally native assets that are price stable against the worlds major FIAT currencies.
Terra runs on a delegated Proof of Stake (PoS) blockchain and is powered by Tendermint consensus, which relies on a set of validators to secure the network. Miners need to stake a native cryptocurrency named “Luna” to mine Terra transactions.
Transactions on the Terra blockchain take seconds to complete. Plus the cost of transaction fees when interacting with smart contracts is a lot lower than the gas fees on the likes of Ethereum. Making it an ideal alternative for developers seeking smart-contract-enabled blockchains.
Terra is responsible for the development of several successful crypto projects, including; Mirror Protocol which is a way to mint crypto assets that mimic the value of shares in publicly traded companies like Apple or Tesla.
Anchor Protocol offering saving products for Terra stable coins with the aim to deliver a fixed rate of 20% APY on your deposits.
What is LUNA?
Luna is essentially the backbone to the whole Terra network by being used for staking to secure the network, governance and the burning of LUNA coins helps to stabilize the Terra stablecoin ecosystem and incentivize usage.
Where to buy Terra Luna?
If you want to buy or trade for Terra Luna, you can use popular cryptocurrency exchanges such as the likes of KuCoin, Binance, or Bittrex. Where you can trade with the likes of BTC, BNB, ETH, EUR, and USDT. Plus you can swap between native Terra tokens within the Terra Station wallet.
Terra Luna Supported Wallets
Once you have purchased or traded for your LUNA tokens, its important to store these in a supported wallet. Keeping your tokens on an exchange is not recommended as it is a far more likely target for hackers. Plus you don’t have control over your assets without access to your private keys.
Terra Station is the official wallet (by Terra) for holding Terra assets and interacting with the Terra blockchain. It’s available as a web extension for the likes of Chrome or Brave or as a standalone desktop application for Windows or Mac. Plus you can also use it in conjunction with Ledger hardware wallets to keep your funds securely offline.
Within the Terra Station wallet you can store, send, receive and swap your Terra assets as well as stake.
Luna holders who want to stake their assets can do this as a validator (which requires running a full node 24/7), or they can do this by delegating to a validator and becoming a delegator.
Currently, Luna validators offer interest of up to 14%. However this rate will vary depending on the amount of the stake, the number of validators and their commission. Plus the rate should also increase as the transaction volume in the network increases.
What are Staking Validators and Delegators?
“Validators” essentially secure the network by running full nodes to provide consensus for the network. They commit new blocks to the blockchain and receive rewards for this.
Then you have “Delegators” who are LUNA token holders who use the Terra Station wallet to delegate their LUNA tokens to a validator, in exchange they receive a proportional amount of the staking revenue.
Plus the Delegators also take on the responsibilities of the validators. So you will need to choose wisely. Meaning that if a validator misbehaves and is slashed, the delegator is also slashed in proportion to their stake.
How to Choose a Validator?
There are a lot of validators to choose from when staking your LUNA. So how do you decide which validator to choose? And how are they different?
Well every validator will come with their own unique offerings. Some validators are community members of Terra, some are professional service providers and some are investors. It’s good to understand who the validators are before you stake with them. The majority will have a website that you can visit, to see what services they provide, etc and their offerings.
Validators can get jailed and get a percentage taken from them if they are malicious. So checking out all this information is really helpful and could avoid picking a bad validator. Therefore, most people will choose a few validators to spread the risk.
You can view all the validators ranked by “Delegation Return” which is essentially the annual APY return. This is obviously a factor you can choose from when selecting your validator.
Plus, you can view their “Voting Power”, which is an indicator of how big the validator is. There’s “Self Delegation” which shows you how much of their own they are staking.
Under “Commission”, it shows how much they’ll be taking and you’ll find that this is usually at 0% when they want to encourage people to use their service or are new. However, it’s worth also checking out the “Max Commission Rate” too which is on their profile page. As well as the max daily amounts which is how much they can change in a day. As this may affect who you decide to choose.
Then finally the “Uptime” will cover last 10,000 blocks, so it just a short term measure. You then have validators that have a tick besides them and this is because they have a profile on the terra site.
Louise created the Every Bit Helps YouTube channel back in 2017, after finding the process of buying Bitcoin difficult. Therefore, in an aim to help others, she hopes that her tutorials will make the process of buying, selling and storing crypto a lot easier for newbies in the future.
After spending 20 years working in London in cyber security, she left the corporate life after having her second child in 2018. Louise now travels the world with her two small children trying to make the most out of life.