Staking rewards are determined by the size of a validator’s stake and are structured to incentivize transaction volume increases. To compensate for this, validators are given rewards in the form of: i) staking rewards, ii) gas fees, iii) taxes, and iv) seigniorage rewards. In this way, validators absorb the short-term volatility of the network. When demand is low and prices are below the peg, it does the opposite. When demand is high and prices are above the peg, it will sell stablecoins for Luna. This is because the Terra protocol readily exchanges Terra stablecoins for Luna at their determined exchange rate to maintain the peg. However, in providing network security and validation, Luna holders and stakers are exposed to the price risks associated with the asset. In essence, Luna represents a validator’s mining power. All else being equal, a validator who has staked more Luna has a higher chance of generating the next Terra block compared to another validator who has staked less. The Terra protocol runs on a Proof of Stake (PoS) blockchain, whereby miners must stake their Luna in order to mine transactions. It has three core functions: i) mine Terra transactions through staking, ii) ensure the price stability of Terra stablecoins and iii) provide incentives for the platform’s blockchain validators. Luna is the reserve currency of the Terra platform. As of December 2020, the network has transacted an estimated $299 billion for over 2 million users. It utilizes a basket of fiat-pegged stablecoins, algorithmically stabilized by its reserve currency Luna, to facilitate programmable payments and open financial infrastructure development. Terra is a decentralized financial payment network that rebuilds the traditional payment stack on the blockchain.

Lowes pricetracker