Terra Classic is a public blockchain protocol for algorithmic stablecoins. Using a combination of open market arbitrage incentives and decentralized Oracle voting, the Terra protocol creates stablecoins that track the price of any fiat currency (They try to). Users can spend, save, trade, or exchange Terra stablecoins instantly, all on the Terra blockchain.
Calculate how much you can earn by staking Terra Classic. Results vary based on the staking amount, term, and type selected.
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- How to stake LUNC
- Do I need to maintain my staking in any way?
- Firstly, delegating from one validator to another can be done without waiting for the unbonding period. You might consider redelegating if your current validator raises their commission rate or gets jailed for misbehaviour on-chain. Once redelegated, you have to wait for 21 days before you are able to redelegate again.
- Secondly, rewards are not auto-compounded. To get the most out of your tokens, you should consider claiming and staking your rewards more frequently, but consider that each transaction will cost you some gas. By using our Luna Classic staking calculator, you can calculate the optimal re-stake frequency for your amount of LUNC. Some tools, such as restake.app, will enable you to pick a validator who will auto-compound your rewards for you, so keep this in mind.
- Lastly, as a participant in the Terra Ecosystem, once you have staked your tokens, you can vote on Luna Classic Governance Proposals. While your contribution and vote are highly valuable to the ecosystem, participating does not affect the sum of your rewards.
- How do I choose Luna Classic validators?
- What are the risks to staking LUNC?
- What is LUNC?
- Staking: Users can temporarily lock up LUNC to contribute to the security of the network. In return for the service, both the validators and stakers are compensated with staking rewards.
- Gas token: Each transaction processed by the network requires a small fee to be paid to the validator. The network also has something called the Tobin tax, this is a fixed percentage fee added to any market swap between Terra stablecoin denominations. The rate varies depending on each Terra stablecoin. For example, while the rate for most denominations is .35%, the rate for MNT is 2%. The Tobin tax was created to discourage front-running the oracle and foreign exchange trading at the expense of users. Every block, Tobin tax fees are sent to the [Oracle reward pool] and dispersed to validators that faithfully report correct exchange rates. Validators then distribute these fees to delegators in the form of staking rewards.
- Governance: LUNC is used to vote on governance proposals on the network. Only staked tokens are eligible to be used for governance voting. The amount of voting power is measured in terms of stake. Unlike many other networks, as a delegator, you are also able to participate directly in governance, rather than passing your votes to the validator.
- What consensus algorithm does Luna Classic use?
- What are the tokenomics of LUNC?
- 10% is allocated to Terraform Labs
- 20% is allocated to the Employees & Contributor Pool
- 20% is allocated to the Terra Alliance
- 20% is allocated to the Stability Reserves
- 4% is allocated to the Genesis liquidity
- 26% is allocated to investors
- $10M was raised in the Preseed round in May 2018
- $24M was raised in the Seed round in October 2018
- $14.5M was raised in a Private sale round
To earn a yield on your LUNC, you can either lend them out to custodial providers or via a Defi lending protocol, run your own Validator or delegate your tokens to validators of your choice.
For the best security and control over your funds, we recommend using a Ledger Hardware Wallet. To delegate your tokens, you should ensure they are stored on your Ledger or the Terra Station wallet, and then follow these steps below:
Step 1: Go to the Terra Staking Portal and connect your Terra Station wallet.
Step 2: Select a validator from the list by clicking on their name. If you are unsure which validator to delegate to, refer to our FAQ on choosing a validator for guidance.
Step 3: Once you have chosen a validator, click ‘Delegate’ and enter the number of tokens you would like to stake.
Step 4: Click ‘Submit’ and finalize by clicking stake and confirming the transaction in your wallet.
Always keep some coins to pay fees with. Never stake your entire wallet amount. Without money for fees, you can’t make any transactions.
Once you have delegated your LUNC, there are things you need to consider going forward.
By delegating to a good long-term oriented validator, you can reduce most of your maintenance and only have to check back to restake your rewards.
It is essential for users to stake their PoS tokens with a dependable and highly performant validator, which is why we have rolled out our Verified Provider Program in June 2022.
When we verify providers, we look at their business through a microscope and analyse things such as their security, value-adds to the ecosystem and the team. You can learn more about the VPP Batch 1 and Batch 2. Providers that are part of the VPP have a blue checkmark next to their names on our website.
There are many metrics to consider when selecting a validator to delegate to:
Commission Rates: The commission rate a validator charges is the % of your reward that the validator keeps for themselves. A high commission rate means your rewards will be lower, whilst a low commission rate could mean that the validator is not profitable and could cause issues for them in the future. Keep in mind that validators can adjust their commission rates up or down over time.
Number of Users: A high number of delegators could indicate positive sentiment towards a validator.
Validators Self-Staked balance: A provider with a high amount of staked tokens likely has more incentive to continue operating their services as they have more to lose than those with low self-staked balances. This metric has some limitations as Validators can choose to delegate to their own validator from another wallet, which is done to increase security of their funds.
Current Status: To check if a validator is currently active, go to the Validator Dashboard on Terra Station. The default view on this page is for “Active” validators, but you can also filter to view inactive validators by clicking the toggle. Keep in mind that only the top 130 validators on Terra Classic, ranked by balance, receive rewards.
Network Share: You typically don’t want to choose a validator with the highest or a low network share. Delegating to the most popular validators increases centralisation risks within the network as those validators will have more say in governance and produce a larger share of the blocks. A validator with a low network share might not be profitable, increasing the risk of them discontinuing their services. If a validator drops out of the top 130, they also stop earning rewards. However, if you are willing to put more time in, then delegating to a smaller validator helps support the decentralization of the network. You would just have to make sure to check regularly if the provider is still active and operating.
Performance: Make sure you pick a validator with the highest possible performance. Further, please check individual validators’ uptime, and our recommendation is only to pick those with a >=99% uptime and a long history of not getting slashed.
Value Add to the Ecosystem: Some providers offer extra services to their delegators, such as tax reporting tools or explorers. This can be another great way to filter for validators that are long-term invested in the Terra Classic Ecosystem. By delegating to a validator that is strongly dedicated to the Terra Classic Ecosystem, you are supporting their development that indirectly impacts the value of your LUNC investment beyond the rewards from staking.
Whilst we want to ensure staking is as safe and transparent as possible, there are still things to consider regarding whether a specific staking option is right for you.
Slashing risk: LUNC delegated to a validator can be partially slashed if the validator misbehaves. On top of getting slashed, a validator can also be jailed, during which time you will not be earning any rewards. You can get slashed up to 5% for double signing events.
Unbonding risk: The unbonding period for LUNC is 21 days. Crypto markets are highly volatile, and investors need to be aware that they cannot sell their tokens immediately once they have staked them. They first need to wait 21 days for the tokens to unbond before they become liquid. Please take note of this lockup before you decide to stake. Consider keeping funds liquid if you do not intend to hold LUNC long-term.
Dropping out of the active set: On top of potentially losing out on rewards if your validator gets slashed, a validator could also drop out of the top 130, meaning they no longer earn any rewards. Ensure you check back frequently to ensure your validator is active, not jailed and has not raised their commission fees.
Protocol security risks: There is an inherent risk that the protocol could contain unknown bugs. This not only applies to staking but your LUNC investment in general.
Please note that this is not an exhaustive list of all the risks related to staking.
LUNC is the native token of the Terra Classic network that is used to carry out the key functions of the platform as detailed below:
Luna Classic is powered by Tendermint BFT. Tendermint BFT is a Byzantine Fault Tolerant (BFT) consensus engine developed by Tendermint. It offers instant finality, is horizontally scalable and is secure against malicious actors. It is also open-source, meaning anyone can inspect and use the code. Additionally, it is simple to set up and use, allowing developers to quickly and easily build distributed applications. The active validator set consists of the 130 highest-ranked validators by staked tokens, from which 1 validator is randomly selected to propose a block with 66% of the remaining active validators being required to attest the block in order for it to become final. The higher the stake, the more likely they are to be selected.
Unlike many other networks, there is no supply cap for ATOM currently. At current network parameters, the ATOM supply is expected to expand indefinitely. The inflation rate of the network depends on the on-chain parameters as well as the realised block time. With ATOM 2.0 potentially around the corner, keep an eye on any news, as this could drastically impact the future supply of ATOM.
Initial token distribution
The Initial token distribution of LUNC is as follows: