What is staking yield?

Staking yield is a reward for staking Luna given from the Terra network to delegators and validators. The distribution is based on the amount of Luna provided (staked) to the network by validators and delegators.

In this analysis, I want to show the evolution of the Luna staking APR chart from August 2021 until today. Also, we want to compare this APR chart with the Luna price chart to see if there are any dependencies.

These staking rewards are coming from three sources, gas and swap fees, MIR & ANC airdrops and the Luna price. Basically it is the amount of all fees divided by the total staked amount of luna extrapolated to one year, also called APR.

In the chart above we can see that since January 2021 the total amount of staked Luna has always been constant at least at 300 million and mostly even higher. The highest amount of staked Luna was in July 2021 with a total of 384 million Luna. A constant high volume of staked Luna is good for the security of the network.

How is the staking yield calculated?

The staking APR is calculated as follows: ((all fees + ANC & MIR Airdrops)/(total staked Luna)) * 100 * 365

Is Luna price influencing staking yield?

As already mentioned above, the short answer to this question is yes, but with less impact.

But the highest impact on APR has still the Luna burning and the amount of transactions/fees!

Sources:

• Thanks to Sam for the ANC airdrop hint! At the end i took another way ;-)
• https://docs.anchorprotocol.com/protocol/anchor-token-anc
• https://docs.mirror.finance/protocol/mirror-token-mir
• https://docs.terra.money/Concepts/Fees.html#gas
• https://docs.terra.money/Concepts/Protocol.html#terra-and-luna
• https://station.terra.money/

Definition of the ANC staking rewards for Luna

ANC - LUNA staking rewards: 100M (10%) tokens are linearly distributed to LUNA stakers over a period of 2 years, starting at 2021-03-17. Tokens will be distributed every 100,000 blocks (approximately every week) starting from block 2179600. Snapshots are taken every 100,000 blocks to determine distribution eligibility.

Definition of the MIR staking rewards for Luna

MIR - LUNA staking reward: 4.9% (18.3M) will be distributed to LUNA stakers throughout the first year since the launching of Mirror Protocol, which was at 2020-12-03. MIR will be distributed every 100,000 blocks (approximately once every week) to Luna stakers only on the first year, starting from block height 920,000. Snapshot will be taken every 100,000 blocks to determine who is eligible for the staking reward distribution.

In this 2021 chart (above) we can see that since August the more the price of Luna goes up, the more the prices of MIR goes down. ANC ist straying pretty solid at an avergae of $3 in a channel between $2,5 an $4.

When we compare the two charts (total staked Luna and Luna price / staking APR) we see that the amount of staked Luna doesn't have an impact on Luna prices nor on APR. Also if we compare Luna price and APR we see that the price of Luna goes up all the time while APR stays quite constant from August to November and even decreases slightly. Since November 9th we see a massive increase in APR, caused by the massive burning of Luna to mint UST. As s byproduct of this burn a lot of swap fees accrued, which result in higher staking rewards, which causes the increase of APR. What we also can say is, that there is no direct dependency between Luna price and APR, it however affects the airdrops via their 'luna exchange rate'.

The airdropped rewards from ANC and MIR are constant the same, they are only distributed on different amount of staked Luna and calculated to Luna by a changing 'luna exchange rate' wich depends on the Luna price.

In the diagram above, we see a trend, that airdrops (MIR and ANC) in Luna value are decreasing. This is because of the higher Luna price. If we converet these numbers to UST it would look different. With MIR, we also see that the one-year distribution through airdrops ended in December 2021. So the influence of airdrops (ANC & MIR) is decreasing and will stop, after all ANC airdrops are distributed in 2023.