How to stake Terra (LUNA) in 2022
Terra is a blockchain for maintaining stablecoins known as Terra stable coins, which are pegged to traditional fiat currencies. Stablecoins on the network are backed by Terra’s native token, LUNA.
With LUNA, users can pay for transactions fees, vote on governance decisions and use staking pools. The token also has a vital function which is to reduce the volatility of the dollar-pegged stablecoin, TerraUSD (UST).
Staking LUNA contributes to the upkeep of the Terra blockchain and helps maintain a healthy network with active participants. If you’d like to know how to stake LUNA, then this page is for you.
We’ll guide you through the process of buying and staking LUNA, and reveal the best ways to protect your funds. This article will also cover important things to consider when staking and show how to find the best interest rates.
Luna staking: How to stake LUNA in 3 simple steps
1. Buy LUNA
Sign up to one of our recommended crypto brokerages or exchanges to start your staking journey and buy LUNA. You’ll need to provide some contact information and personal I.D. during registration. After creating an account, you’ll need to deposit some money to buy your crypto. Deposits can be made using a credit or debit card or bank transfer. Card payments are instant, but bank transfers can take longer.
Once you have some funds ready, head over to your preferred trading platform’s exchange page and search for LUNA, then enter the amount you’d like to purchase and click the buy button. Within a few seconds, your LUNA should appear in your portfolio.
2. Stake LUNA
If you’d like to stake LUNA on your chosen cryptocurrency exchange or brokerage, then head over to your trading platform’s staking page and look for the available staking options for LUNA. You’ll be able to see the current staking interest rate along with other information, such as how long you need to keep your funds locked. It will also let you know if you need to stake a certain amount to be eligible. It’s worth noting that rules for staking and unstaking on an exchange or brokerage will vary. The most important things to consider are staking flexibility and yield.
3. Unstake your LUNA (when you’re ready)
There is a 21-day unstaking period on Terra Station, and you should be aware of this before you stake. If you need your funds urgently, you wouldn’t be able to access them during this time. At the end of the 21 days, you will have full access to your LUNA and be able to hold it, sell it back into a fiat currency or swap it for another crypto. Equally, if you’re a real fan of the project and believe that the price will continue to rise, you can restake your LUNA to compound your principal and staking rewards.
Where can I stake LUNA?
If you have some LUNA and are ready to start staking, then why not explore our list of recommended crypto exchanges and brokerages below to begin your journey. If you’d like to learn more about the highest staking rewards and security, then keep reading.
How to choose a staking platform
When choosing a staking platform, take note of its reputation, how secure it is and if there are any required lock-up periods. All staking platforms will show how much interest stakers can earn using their services. The more a user delegates to a staking service, the greater their yield. Some staking platforms offer more generous interest rates than others, so it's good to always be on the lookout for the best deals. On Terra Station, you’ll notice that validators who host a staking pool will take a commission percentage from everyone who stakes with them. The lower the commission, the greater your Luna staking rewards will be.
Most exchanges and brokerages maintain a clean reputation and have strong security to defend against malicious outsiders and hacks. But be wary of interest rates that look too good to be true. Many unsuspecting, newbie investors see dollar signs when extremely high yields appear on the screen, but if the carrot is too big, it’s likely that the stick is even bigger.
You might want to use a DeFi staking platform, but there are things to consider. They work very differently to centralised exchanges, and the majority are prone to hacks and attackers who aim to drain users’ funds from a staking contract. If you decide to use DeFi staking platforms, you should always find out how long they have been around, their reputation, and whether an independent source has audited them. Whatever you decide to do, you'll need to buy some LUNA first. Below are some recommended places to get your hands on the luna token.
Terra’s crypto wallet application, Terra Station, also provides a good way for investors to stake their LUNA safely. You can download the application from the Terra website. Once installed, you’ll then be asked to set up a wallet. Once set up, users can send their LUNA into Terra Station wallet and begin staking from the application. The staking app will show the current annualised interest rate for staking on Terra Station, along with a list of validators with whom they can delegate their tokens for staking. The app will show each validators commission rate, voting power and uptime. Choosing a validator with a low commission rate and 100 percent uptime is best.
When it comes to lock-ups (how long you have before you can reaccess your tokens), most staking services will provide specific terms. Exchanges and brokerages will usually have a 30-day lock-up period, and you’ll only be allowed to unstake when those 30 days are up. Before delegating your luna tokens to any staking platform, keep in mind how long the staking period is and remember that, with Terra Station wallet, there is an additional 21-day unwinding period.
Where can I earn the highest staking rewards for LUNA?
It’s tough for anybody to predict where the highest rates of return for staking will be. Staking interest rates fluctuate according to a number of variables including how many users are staking, the underlying price of the staked asset and the overall strength of the network.
Exchanges and brokerages tend to limit the number of users who can stake on their platforms but if you manage to get in early, their interest rates can be just as good as anywhere else in decentralised finance (DeFi). Terra Station always offers generous staking rewards for users. Equally, lending platforms such as NEXO provide some of the most competitive returns on the market.
Before choosing a staking platform, make sure to research what’s available in the market and keep a note of staking platforms that offer the best services.
Why should I stake LUNA?
The Terra network and LUNA token are only a few years old and have had a blistering run with total value locked in staking (TVL) flipping Ethereum in March 2022. This is impressive and points to a project that attracts investors looking for real utility and sustainable returns.
Founded by Daniel Shin and Do Kwon in 2018, Terra had the backing of 15 Asian e-commerce companies with a combined 45million users and processing around $25billion a year between them. This type of confidence in a crypto project doesn’t happen very often. So, if you’re looking to see where the smart money is going, Terra is a good example of a strong contender for longevity in a volatile sector, barring any major changes to crypto regulations in near future.
Terra is all about innovating in crypto stable coins, making it attractive to any business, bank, or even government that wants to peg a cryptocurrency to their main fiat currency to facilitate worldwide payments.
Holders of LUNA who support the systems’ infrastructure through staking benefit from passive income through fee payments from these transactions while also benefitting from Terras ecosystem. Together, these things greatly increase the token’s chances of price appreciation. Terra has made staking LUNA the best way to be involved in the future of the network and one of the best ways for holders to gain extra value on their investment.
How long should I stake LUNA for?
How long you stake for will depend on your personal investment strategy. If you are a swing trader, you will probably want to take advantage of market volatility and move your LUNA into a stablecoin when the markets turn. But if you believe in the project and plan on holding onto your LUNA for five years or more, in the belief that the token will one day catch up with—and possibly overtake the likes of Ethereum or Bitcoin in terms of market capitalisation—then staking will provide ongoing interest, which, when compounding is taken into consideration could put your capital growth on steroids.
Frequently Asked Questions
It's safe to stake LUNA using recommended staking platforms and Terra Station. That said, if you are a short term trader, your underlying investment could go down, which means if you panic and sell you will crystallise losses. This is why it’s important to have a clear strategy before you buy LUNA—or any other cryptocurrency for that matter—so that you don’t make impulsive decisions that could hurt your portfolio.
How much LUNA rewards you earn while staking will depend on the staking platform’s interest rate and how much LUNA you decide to stake. Look out for generous interest rates and then stake a suitable amount of LUNA to earn greater rewards. If you time the markets well and buy dips, you increase your chances of making greater returns. Doing things this way is tricky, though, which is why many less experienced investors do what is known as dollar cost averaging (DCA). Simply put, this means regularly buying LUNA over a long period, regardless of price.
LUNA's price will go up if the market conditions are right and the Terra blockchain is doing well. Nobody can be certain of the price action of volatile assets in the future. The best way to know what is going on with a particular digital asset is to follow them on Twitter where they will make regular announcements that keep you in the loop.
By staking, you are delegating your funds to a staking pool that will earn interest on your deposited amount. Staking LUNA is good for the Terra network as it helps maintain the consensus mechanism. It’s also good for delegators and validators who, as stakeholders, can cast votes in the blockchain’s governance system and be a driving force for the project.
If you’d like to stake using Terra Station, visit the Terra website and download the application. After installing and setting up a Terra wallet, send your LUNA from your chosen trading platform to your non-custodial Terra wallet. When your LUNA arrives, head over to Terra Station’s staking page and search for a validator with which to delegate your tokens. Be sure to research the options thoroughly and look out for uptimes and commission rates. If you choose a bad validator, you could lose your funds. Once you’ve decided on a validator to stake with, delegate your coins using the Terra Station’s interface.