Staking is a process where users lock up their coins with a validator on the blockchain network. The benefit for users is that they’ll earn crypto rewards. It is similar to depositing money in a savings account, except there can be a lockup period to unstake (withdraw) their coins. On the LUNA Classic blockchain, it takes 21 days to unstake LUNC. So users cannot immediately unstake their coins, they must wait 21 days to get their coins.
Generally speaking, a higher LUNC staking ratio... calculated as "Staked LUNC" / "Total Supply"... will have a positive affect on the LUNC price, as there are fewer tokens available for sale on the market, leading to reduced selling pressure.
Users who stake LUNC earn rewards in the form of free LUNC. These rewards are paid by the validator that the user is staking with. Rewards are often measured as APY (annual percentage yield), although the actual yield percent can vary due to the amount of coins staked. Less coins staked typically means higher APY, and vice versa.
This staking reward incentivizes users to hold onto their coins, and staking LUNC helps maintain the security and integrity of the blockchain. Staking also helps to decentralize control of the blockchain, as users who stake coins have a say in how the blockchain is managed via governance votes.
Staking is a consensus mechanism used by many blockchain networks to secure the network and maintain consensus. It requires users to put up a stake of the cryptocurrency that the blockchain is based on (LUNC). The stake is delegated to a validator.
Validators are responsible for verifying and validating transactions on the blockchain and for helping to create new blocks. If a validator is found to be dishonest or unreliable, their stake can be slashed (reduced) as punishment. This encourages validators to act in the best interests of the network as they have a financial incentive to do so. This helps to ensure that the network is secure and that transactions are processed correctly.
LUNC validators compete to produce blocks. Every time a block is produced, transactions are finalized. Each users who submits a transaction has to pay gas fees. The validator that produces the block claims the gas fees. The gas fees are shared between the validator and the users who are staking LUNC with that validator.
Like many, I lost big during the Terra collapse. I didn't panic sell when UST de-pegged, and consequently lost a huge portion of my savings. It was a hard lesson to learn.
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