Terra Luna : 5 Easy ways to optimize your yield
If you’re sick of the high fees on pure ETH chains, and are not impressed with the centralization of the Binance Smart Chain (BSC), you might want to consider yield farming on the Terra Luna network instead.
Sitting quite comfortably at around 50th position by market cap, this is a little known project that has been backed by notable VCs like Binance Labs, Polychain, Coinbase Ventures and Galaxy Digital.
Fueled by real world fintech use cases of payment/ecommerce players like Chai, Carousell and Qoo10, Terra Luna aims to solve one of the fundamental issues of using crypto as a currency — stable coin usage.
What Terra Luna Is:
- A stable coin ecosystem getting usage from the real world (currently more Asia centric)
- Not your Typical DeFi Yield Farm/Aggregator — staking yields are generated from fiat payment networks
LUNA and its stable coin — TerraUSD (ticker: UST) are inextricably linked (source: CoinMarketCap)
But enough about the bull case. Today we’re going to look at how to juice up those yields on the Terra Luna network.
1. Compound your staking rewards for higher yields
Get started here by downloading your wallet and connecting to a node, Think of a node as a custody or trustee, helping you maintain the connection with the network. Right now yields can range from 10–14% and are generated by several sources, including fees from end users utilizing Chai payment systems.
The numbers here are a rough estimate of what you will get based on a simple annual return. But we can compound these returns by re-staking our rewards with the node. And since transaction costs on Terra Luna MUCH lower compared to ETH chains (~$0.03), you can do this as many times as you like:
- Withdrawing all your rewards (these come in various Terra stable coins)
- Swapping all these coins back to LUNA
- Re-delegating these coins back to your node
The steps may sound complicated now, but with a little practice, will take only a minute or so.
So now the amount of LUNA you now have staked with the node has increased, and your yield will be based off this new amount. Compounding your asset this way definitely adds up quite a bit (you’ll thank me when we are back in the bull market). But why take my word for it? Have a look for yourself here.
2. Collect airdrops for new projects (read: FREE money)
Staking LUNA gives u access to their project airdrops. Remember Terra Luna is a stable coin ecosystem and there are other projects built on top of this.
The 2 main ones at the moment are Anchor (savings/lending protocol) and Mirror (synthetic asset protocol). As part of driving LUNA and UST adoption, airdrops are a way for people to become early adopters of these other projects as well.
Imagine if someone deposited Uniswap tokens into your wallet for free 2 years ago. These would be worth a sweet sum today. As projects expand and adoption picks up, these tokens will become increasingly valuable.
3. Make use of the Terra ecosystem to further boost returns
Imagine someone paying you to borrow money.
And I’m not talking about ECB bonds! The Anchor protocol actually distributes rewards in the form of Anchor tokens (ANC) when you
- pledge LUNA onto the platform as collateral, and
- borrow UST.
You pay 17% in interest but get 226% in ANC rewards for borrowing UST
This incentivizes adoption of the lending protocol and encourages people to try it out. Currently, there is about $650 million TVL in Anchor, This number came off slightly from $700 million before the recent Bitcoin dip to $30k, but is steadily picking up again.
Mirror Protocol, another project on Terra Luna, allows you to mint synthetic assets and stake them. You can then get rewards in return for staking your liquidity pairs (LP).
As more projects turn up on the Terra Luna ecosystem (an even more recent one is Orion Money) , it pays to explore their features to max out all your rewards.
4. Use your governance vote wisely
Staking LUNA allows you to vote for governance changes. For example, some votes call for tweaks of staking rewards, validator metrics or even adding additional Terra stable coins like TWD or SEK.
These changes, once passed, may affect Terra’s reserve funds, or even tokenomics, so as they say in Singapore — vote wisely.
5. Be aware of staking costs
On an ETH chain like AAVE or BSC chain like Pancakeswap, staking and unstaking your assets are instantaneous. However on Terra, it takes up to 21 days to unstake your assets from the node. This is an unbonding period where your LUNA assets do not earn rewards and cannot be transferred, exchanged or spent.
That is the downside to staking on Terra Luna, so if the asset price runs up, be aware that you have a lag time before you can sell them in an exchange.
If you’re in it for the long haul this wouldn’t be an issue. I personally get around this by staking some and keeping some available if I want to sell them. Sure you won’t get to enjoy the maximum yields but hey, what’s life without a few choices?
Not your average DeFi Protocol
Terra Luna is more than an ordinary yield farm or DEX. They are an ambitious ecosystem integrating real world payments with money protocols in the crypto world.
With strategic partnerships, accessible founders and a zealous community, there are an increasing number of applications being developed here, and it’ll only be a matter of time before they hit that sweet flywheel effect.
If you’re bullish on their outlook, it pays to make your assets as productive as possible, especially during sideways trending markets. Let me know how your experience is like staking on the Terra network!
P.S. If you liked this piece and are feeling generous, I’d be forever in your service if you could leave me some claps below!
Originally published at https://pocketchange.co on June 17, 2021.
