Terra Luna Delegation Guide
Stake and delegate your $LUNA for airdrops and how to do it
$LUNA is a proof-of-stake (PoS) token which means you can stake $LUNA with a validator (similar to miners but for PoS tokens), allowing you to earn transaction fees. Think of it as owning shares in a payment network like VISA, where you earn from every transaction made on the network.
In this article, we will explore more reasons why you should stake your $LUNA on top of just earning transaction fees.
First, why stake your LUNA?
For airdrops (free tokens to your wallet)! This is essentially free money so why say no to that? The $UNI airdrop from Uniswap is now worth $8000 (400 tokens worth $20 as of writing), and airdrops from $LUNA could be worth that much in the future!
Whenever a new protocol launches on Terra, they may do a genesis airdrop, which is usually a big airdrop to supporters to kickstart the project. There are over 10 known protocols being developed on Terra, meaning more genesis airdrops waiting for you!
Additionally, staking luna helps to support the network by adding value to it, and ensure the network remains decentralised.
Similar to how having a large amount of $ADA being staked and ‘locked up’ makes the price more stable as there are less circulating supply, having more $LUNA staked would achieve a similar effect as well, potentially driving the price of $LUNA up.
Validator Terms Explained
Validators are an essential part of the Proof of Stake consensus mechanism. They are essentially the moderators of the staking system and have the extremely important job of authoring new blocks on the chain.
Here are some common validator terms explained:
Voting Power: How much voting power the validator has. Higher means more say in Governance proposals, but too high (>5% could pose a centralization risk).
Self-delegation: The % of LUNA inside delegated by the validator himself
Validator Commission: How much commission of your staking rewards the validator will get. This is decided by the validator. The validator takes this as running cost to upkeep server used for validation. Usually a low figure like 1% or below is okay, it doesn’t really affect your earnings too much and they need to eat too.
Delegation return: How much estimated return per year this validator can give you based on the $LUNA staked. It’s good to go with a high number, but avoid the absolute highest if they have very high voting power due to centralization risk.
Uptime: How long the server has been up. If the uptime is low, rewards given may be ‘slashed’. Choose validators that have 100% uptime.
Pro-tip: When choosing validators, you also want to prioritize those that have a profile with a ‘tick’ beside their name as they are likely to be more credible.
How is the Ranking of Validators determined?
The most important metric for the health of the system is voting power, but you can also sort it by other metrics by clicking on the columns itself.
Why redelegate your LUNA / How to choose a validator?
So many validators! Which do I choose? Does it matter?
I’m sure what we are most concerned about is how much money we can make.
Factors to consider for maximum profit:
A. You want more Orion.money initial airdrop
Orion is having an airdrop for LUNA stakers where based on a snapshot on an unknown date. If you want to get more, you need to stake with Orion. This is also why it jumped to being one of the top 5 validators.
B. Other airdrops like Nebula $NEB and weekly airdrops
In general, airdrops are distributed evenly among validators, so the less users staking on a validator, the higher the airdrop amount you will get. Which means if you stake on validators not in the Top 5, you tend to get more rewards from weekly airdrops.
For one of the upcoming airdrops, Nebula $NEB, according to Do Kwon, the founder of Terra, you need to stake with a validator outside of the top 5 to get the airdrop.
Talis Protocol will also get extra airdrops I believe.
C. (Other factor) Promotes decentralisation.
This is to ensure Terra Network remains up even if some validators inevitably has downtime. And prevents a few validators from having too much voting power and influence in governance proposals.
Summary: If you only stake at Orion, your weekly airdrops will decrease as too many stake at Orion, and the rewards distributed are lower. The best course of action is to unstake from Orion after the snapshot is taken to get more Orion. However, Orion’s snapshot date is not out, the decision is not clear.
What I did was to re-delegate half my LUNA from Orion to other validators to get more weekly airdrops while also maintaining my Orion delegation.
Here’s how to redelegate your LUNA.
Note: After re-delegating, you cannot delegate back to the previous validator until 21 days later.
Download Terra Station at https://station.terra.money/ (if you haven’t done so).
- Open Terra Station and connect to your Terra wallet
- Click on Staking Tab (Withdraw rewards if you haven’t done so)
3. Click the new Validator you want to delegate to
4. Click Delegate. Select old validator under “Source”.
Enter amount you want to re-delegate.
Click Next. Enter password & click Delegate.
Remember to leave 0.1 $LUNA for transaction fees !
If you are interested in finding out more details about the terra ecosystem, visit this link: https://terra.smartstake.io/eco.
For staking analytics, visit this link: https://terra.smartstake.io/
Here’s a list of existing and upcoming projects on terra: https://www.learn-terra.com/projects and https://terra.smartstake.io/projects
Hope you found this article useful and may you catch the biggest gains across the markets!