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Slicing Token Staking II — Terra Station

Hello, I’m Team Protocon’s Editor Y.

Following the baton of a series of slicing token staking series from last week, this research will discuss Terra Station. If you missed the last series [Analyzing Token Staking 1 — KLAY Station], please click on the link.

Before we talk about Terra Station, let’s take a moment to review the concept of staking. You’ve heard of staking a lot here and there, and you still don’t understand?

What and why is staking good?

Staking refers to the act of receiving interest by depositing cryptocurrency in the network in the PoS ecosystem and contributing to the security of the blockchain. In the same context as Bitcoin, the PoS blockchain rewards those who participate in staking with reward tokens for verifying data through mining in a proof-of-work (PoW) model. Simply putting and saving coins in the similar concept as installment savings and getting interest back with coins.

Terra is using a Delegated Proof of Stake (DPoS) similar to the PoS model. While the overall concept of PoS and DPoS is similar, in PoS if anyone is qualified they can build validator nodes to participate in the network whereas DPoS has the difference that only elected nodes can participate in the network.

At Terra, you will be rewarded by staking and given the right to participate in governance voting. The staking compensation rate is determined by the Terra Transaction Fee, Luna Transaction Fee, and On-Chain Swap Fee, and in the case of governance voting, it is followed by a vote of its delegated Verifier node.

Terra and Luna

There are two coins in the Terra Protocol. Terra has a stable coin ‘Tera’ that has no change in price unlike existing cryptocurrencies and a staking coin ‘Luna’ that stabilizes prices.

<Terra and Luna> Image credit: Terra
  • Terra

Terra is an algorithm-based stable coin. To ensure the price stability of Terra, Luna controls supply and demand based on separate staking coins and algorithms. Terra currently forms a group of currencies in conjunction with various legal currencies such as the won, the U.S. dollar, the yen, the Singapore dollar, and the IMF Special Drawing Rights (SDR).

  • Luna

Luna is a staking coin in the Terra Delegated Proof of Interest (DPoS) blockchain, which is a key means of security and stability. Luna plays three major roles in the Terra Protocol, absorbing Terra’s short-term price volatility.

  1. Terra is issued by transmission to the network.
  2. It is issued or incinerated to ensure price stability of terra.
  3. The staked Terra in the Terra Network allows participation in governance, participation in decision-making and receiving transaction fees in the form of dividends in proportion to the interest.

To sum up, Terra is guaranteed price stability by the Staking Coin Luna and algorithms that adjust issuance and incineration with the Stable Coin in the Terra Network.

Digging The Terra Station

Terra is not based on Ethereum, so instead of using metamasks or other ERC 20-based wallets, Terra Station serves as a separate wallet. The Terra Station can be used by downloading the desktop app (web-based/window/mac support). Terra Station has the ability to participate in my wallet status and transaction history verification, swap and governance.

Image credit: Terra Station_Dashboard

DASHBOARD

Terra Station’s dashboard provides a variety of key indicators. You can check the status of the community pool to support new projects, and you can check various indicators by currency type or period.

Currently (as of 2021.08.09), the total issuance of Luna is 995,623,134 Luna, of which 369,990,293 Luna is staked. This is equivalent to 37.16% of the total issued Luna, and it maintains a fairly high staking rate. As of now, Luna’s annual staking return is 5.84%.

Image Credit: Terra Station Guide_ Watch your rewards pile up

STAKING

In Terra Station, delegators can select validators to stake Luna. The rewards that can be obtained through staking (Governance Delegation Rewards) include Luna, KRT, SDT, MNT, and UST. The roles of delegators and validators are as follows.

  • Delegator: A person who delegated Luna to a validator among Luna holders. If a validator who has been delegated Luna earns commission revenue from the block, the delegator can receive revenue in proportion to the amount of Luna delegated by him.
  • Validator: A person who directly staked the Luna they have. They can participate in Terra network governance based on their delegated stake(Luna). In addition, as the subject of block generation, it is possible to take commission profits.

In the Staking tab, delegates can select validators to proceed with staking. Currently (as of August 09, 2021), there are about 132 validators that can be staked. Staking is completed by selecting a validator for the delegation target and entering the delegation quantity. After staking is completed, you can check the rewards accumulated in your wallet or withdraw whenever you want. Undelegate can be carried out simply with a single click, but it takes 21 days to do so. It also has the ability to re-delegate another validator. If you select the validator you want to re-delegate, click the “Delegate” button and change the “Source” only, you can change the delegation to the new validator without an unbonding period of 21 days.

SWAP

In the Swap tab, you can freely swap the cryptocurrencies based on Terra. You can exchange KRT pegged to won (meaning that the price of cryptocurrency is pegged to the value of legal tender) for UST pegged to US dollars, or Luna for KRT. However, a 0.25% Tobin tax is charged for swaps between Terra cryptocurrencies, and a minimum 2% fee is charged for swaps between Terra and Luna.

GOVERNANCE

You can participate in on-chain governance through the Governance tab. Anyone who has staked Luna can apply for a vote by posting a new proposal and can vote on other people’s proposals. In addition, it provides the ability to submit various proposals, such as changing the commission rate or community-related content.

Above, we learned about the relationship between Terra and Luna, and Terra Station. Terra is taking the lead in realizing the popularization of cryptocurrencies and blockchain-based services by releasing various products such as Mirror protocol and Anchor protocol. Protocon will also absorb only the strengths of leading players and return to you as soon as possible with the best service that provides a convenient experience for users. Then, in the next research, we are going to dig into Tokamak Network’s staking program, so we ask for your interest and anticipation.

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