Question 1

What is LUNA, and how does it differ from LUNC?

Accepted Answer

LUNA is the native token of the Terra chain launched in May 2022, primarily used for staking and governance. It corresponds to the new Terra network and is not LUNC on Terra Classic; they are different assets on different chains. After the Terra ecosystem split, the new chain continued to use the names Terra and LUNA, while the original chain was renamed Terra Classic and the original Luna was renamed LUNC. Therefore, both the network name and token ticker must match before transferring, staking, or checking balances.

Question 2

When staking and delegating LUNA, who does what and what is the token's status?

Accepted Answer

Holders can delegate LUNA to validators to participate in the proof-of-stake security mechanism. Validators run nodes, validate transactions, and participate in block production and consensus voting; delegated LUNA is counted toward that validator's staking weight. Delegation does not mean transferring ownership to the validator: the assets remain owned by the delegator, but cannot be freely transferred or traded while staked. The protocol's reward process distributes rewards to staking participants, and validator performance and commission affect actual results.

Question 3

How does LUNA staking connect to governance voting?

Accepted Answer

Staked LUNA can be used for governance voting; official documentation states that one staked LUNA corresponds to one vote. Holders may vote themselves; if they do not vote themselves, voting power is handled according to the vote of the validator to whom they delegated. Therefore, selecting a validator affects not only staking operations but also how a holder is represented in governance when not actively voting. Unstaked balances do not have this staked voting weight.

Question 4

Why is there an approximately 21-day wait after unstaking LUNA?

Accepted Answer

Unstaking enters an unbonding period of approximately 21 days. The waiting period prevents staking weight in the network from disappearing immediately due to instant exits; before it ends, LUNA cannot be freely traded and no longer earns staking rewards. While staked, LUNA may participate in rewards and governance but is not readily transferable; while unbonding, it can neither be freely transferred nor continue earning rewards; only after unbonding is complete does it return to an unstaked balance that can be freely used.

Question 5

How can I change LUNA validators, and what is the restriction?

Accepted Answer

Through redelegation, staked LUNA can be moved from one validator to another without following the normal process of completing unbonding and then staking again. It is suitable for adjusting the supported validator while maintaining staking status. Redelegation is not an unrestricted instant switch: the validator receiving the delegation is subject to a further redelegation restriction for the following 21 days. This restriction prevents staking weight from being repeatedly migrated within a short period.

Question 6

Where do LUNA staking rewards and new supply come from?

Accepted Answer

Terra's mint module creates new LUNA by block and feeds it into the staking-reward distribution process. Therefore, one source of rewards is new issuance by the protocol, rather than tokens created by validators themselves. The official module documentation lists a fixed annual inflation rate of 7%. This parameter describes the new issuance rule; an individual delegator's actual rewards still depend on staking status and the reward-distribution process, and 7% cannot be treated directly as a guaranteed personal return.

Question 7

How was LUNA initially issued on the new Terra, and how do locked balances affect it?

Accepted Answer

At genesis, the new Terra set an initial supply of 1 billion LUNA and distributed it to addresses in the original Terra Classic ecosystem that met snapshot conditions. Genesis distribution answers the initial attribution rules at the launch of the new chain; minting by block is the subsequent new issuance mechanism. Some genesis allocations are subject to lockups and gradual release. Locked balances cannot be freely traded, but can still be delegated, redelegated, or undelegated; therefore, “able to participate in staking” and “freely transferable” must be assessed separately.

Question 8

What asset-status-related risks are involved in delegating LUNA to a validator?

Accepted Answer

In addition to the wait for unbonding, staking LUNA carries the risk of validator slashing. If a validator triggers protocol-specified penalties, a portion of the staked assets delegated to that validator may also be affected. This does not mean token ownership has been transferred to the validator; rather, the proof-of-stake system links a validator's consensus responsibilities with the delegated balances supporting its staking weight.

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