Introduction

Crypto staking earns passive income by using specific cryptocurrencies to help confirm transactions on a blockchain network. Staking differs from crypto mining, although both can provide yields exceeding what’s available from a typical savings account.

Though crypto staking sounds complex, the principles are pretty straightforward. And there is an increasing number of companies aiming to make crypto staking simpler for everyday users.

Staking

Crypto staking is an essential part of the technology behind cryptocurrencies. Blockchains work “decentralized,” meaning there’s no middleman (such as a bank) to confirm new activity and ensure it comports with a historic record maintained by computers across the network. Instead, users collate “blocks” of recent transactions and submit them for inclusion into an immutable historic record.

Users whose blocks are accepted get a transaction fee paid in cryptocurrency.

Staking is a way of preventing scams and errors in this process. Users proposing a new block (or voting to accept a proposed block) put some of their cryptocurrency on the line, which incentivizes playing by the rules.

How transaction volume relates to fees paid to stakers

When users stake LUNA, secure the network and get paid a portion of the swap fees between LUNA and UST. In addition, it authorizes to receiving airdrops from many Terra Ecosystem projects. Delegators of Luna can, on average, earn up to 8.5% APR on their LUNA.

According to the information mentioned, the volume of transactions seems to be directly related to Staker's rewards. Generally, the more that is at stake, the better a user’s chance of earning transaction fee rewards. Validators in platforms, such as Prism, offer different APR; we can gain more profit by choosing the most optimal option according to our cases. It is also clear that Validators are trying to attract more volume by offering attractive offers, one of which is to increase APR.

Fee

now let's look at the fees derived from transactions and native swaps.

For calculating the amounts of fees derived from UST transactions I use terra.transactions and terra.msgs table. On the other hand, because the number of these transactions is very large and requires a high computational load, I have shown only the daily fee for the first 10 days of 2021.

The chart below shows the daily fee volume of swap transactions. Native Swap is Luna swap to UST and vice versa. As can be seen from the chart, the fee volume has increased dramatically from November 10 to November 20, 2021. If we look at the price of Luna on the same date, we will see that the price has decreased. Usually, in decreasing trends, the swap volume increases, and as a result, the volume of the fee also increases.