Everything You Need to Know About Staking LUNA on the Terra Protocol

LUNA is one of the most popular staking coins, allowing users to earn passive income by locking up their LUNA tokens. The success of its platform allowed LUNA to surpass Ether, the native cryptocurrency of the Ethereum blockchain, as the second-most staked asset in March 2022, with holders locking away $30 billion in tokens.

According to data, users can earn around 6-7% annualized interest on their deposits, depending on how they participate in the staking process, which is far more than any interest rate offered by traditional banks. 

If you are interested in staking Terra LUNA, you’ve come to the right place. In this article, we’re highlighting everything you need to know about staking LUNA on the Terra protocol.

Staking LUNA on the Terra Protocol

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How to Invest in LUNA

LUNA’s blockchain runs smart contracts and validates transactions using a delegated proof-of-stake consensus method. As a result, holders who want to stake LUNA have two choices: set off as a validator, or choose another existing validator to whom they can delegate their coins.

A “validator” is someone who assists in the verification and proposal of new blocks of transaction data. A person or group of people is required to run computing equipment of a certain spec virtually nonstop with LUNA. It’s so competitive that only the top 130 validators are allowed to verify and add new blocks to the Terra blockchain. That rule is unique to the LUNA staking ecosystem and is not found in other staking assets.

Validators receive a commission fee from network stakeholders in exchange for their efforts. The top five validators charge a 5-10% commission fee for their services, which must be considered when calculating delegated staking returns. Validators can delegate funds to other LUNA holders to stake them. The larger the fund, also known as the staking pool, the more likely it is that the validator and his group of delegators will propose a block and pocket the reward from the transaction fee.

Delegation staking is much more accessible to the majority of token holders looking to earn interest on their assets. Any LUNA holder can delegate his coins to a validator without having to meet the stringent validator requirements and still earn rewards.

Slashing is a significant risk for anyone who stakes LUNA (whether validator or delegator). If the validator makes a mistake during the consensus process, such as missing a vote, experiencing a network outage, or being offline for an extended period, they will be penalized. This can result in either losing a small portion of the staked funds, including the delegators’ stake, or being completely excluded from consensus voting, implying that no rewards can be earned.

Delegating LUNA to a Validator

If you want to delegate your LUNA to another person or group of people, the Terra Station Wallet – the official wallet software for Terra assets – is the best option. First, navigate to Terra Station, then install the browser extension or desktop application by clicking Connect. After that, enter a username and password to create a new wallet (keep them secure). Then transfer LUNA tokens from an exchange to your Terra Station Wallet. Go to the staking tab once you have the tokens in your wallet. Lastly, stake your tokens and choose a validator to delegate them.

An Overview of Terra Station’s Staking Pools

As previously stated, delegators can earn an annual yield of more than 6% by staking their LUNA. However, keep in mind that yields may change in the future. If you decide to stop staking and withdraw your tokens, you will have to wait 21 days before receiving them. A comprehensive guide on how to begin staking LUNA can be found here. Consider the following factors when selecting a validator delegate to stake LUNA:

●      The stake pool size. If the validator’s fund size falls below 130th in the rankings, all of his privileges will be revoked.

●      Amount of self-bonded tokens. Coins that are owned by the validator and pledged to stake as his stake in the game.

●      Amount of delegated tokens. How popular is the validator in comparison to others, and how many coins have been committed to the fund?

●      Commission fee. The amount deducted by the validator from the staking rewards for running the node before distributing them to delegators.

Staking LUNA on the Terra Protocol


As you can see, staking is incredibly easy on the Terra network. There’s a whole other world of possibilities when it comes to receiving your rewards from the staking of your LUNA, and no one wants you to miss out. For those interested in investing in Terra but don’t want to run full nodes, this means staking will be a viable option for you. 

About Author

Staking LUNA on the Terra Protocol
Marshal NosaCEO
I'm a professional digital marketer with over 7 years of experience in the field. I create well researched content related to finance, cryptocurrency, stocks, forex and metaverse related articles.

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