LUNC Staking
Last updated
Last updated
LUNC staking provides a passive income stream by pooling tokens from supporters, staking them, and reinvesting the funds into the token bonding curve to raise the BASE token price. The APY is based on the LUNC reserve within the TBC and BASE supply. An important note here is that BASE itself is not staked, but the underlying LUNC is staked to the LBUN Project validator. In the future, the project may explore staking a portion of the LUNC with smaller validators to increase decentralization.
The last six months has seen staking rewards upwards of 300% APY. However, it is important to note that these percentages constantly change and are greatly influenced by the BASE price changes. If no new BASE is bought, it is expected that the percentages will be on par with regular LUNC staking as the project withdraws and reinvests the rewards daily.
One of the disadvantages of staking coins is that there exists a 21-day un-staking period. This limitation is enforced by the Terra Classic blockchain as a measure of security against rogue validators. The BASE token will provide the ability for the community to skip the 21-day un-staking period and collect their LUNC in a shorter timeline. This feature is called “Liquid Staking” and is implemented via two distinct mechanisms:
1. The BASE dApp has implemented a Peer-to-Peer marketplace (P2P) where holders can offer their BASE for sale. The P2P market works on a non-custodial basis via the use of a smart contract. Each wallet can instantiate a smart contract and then set their price and quantity for their BASE to be sold. At any time, the seller can also change the price or quantity as desired. Their BASE remains in the smart contract until either it is bought or until the seller cancels the offer. There are three benefits to using the P2P option instead of selling on the dApp:
a. Tax savings for both the seller and buyer. The Seller pays NO tax, while the buyer pays a reduced tax rate of 2.5%. This is a nice savings over the dApp’s 4.8%.
b. The seller avoids the 21-day unstaking period as the BASE and LUNC are transferred between parties immediately
c. The TBC reserves are not affected as no LUNC is removed from the validators
2. BASE has been paired with several tokens on TerraSwap to allow holders to swap for other tokens of interest. The pools are also accessible from the CoinHall DEX aggregator. The LUNC used to purchase BASE will remain in the validator generating rewards. At some point in the future traders can swap back to BASE if they so desire. Arbitrage traders will help equalize the price of BASE between the dApp and the DEX pairs.
