Staking Yield, Mvmt 1: The Basics

Bounty: Explain in your own words (i.e. don't copy the documentations) how Terra's staking yield is calculated. Provide a graph that compares LUNA staking yield to LUNA price over a time period that you define. Solution: Part 1 In blockchains there is two way for confirming a transaction. POW which stands for proof of work and POS which stands for proof of stake. Almost every blockchain needs some full nodes and relies on these full nodes in order to perform decentralized and appropriate. A full node is a program that validates the transactions and blocks of a blockchain. Terra is built on The Columbus-5 Mainnet that is a public Proof of Stake (PoS) blockchain. which means there is no miner for mining and conforming Terra’s transactions and in order to confirm a transaction, users should stake their tokens.in Terra blockchain we have Validators which run full nodes and participate in consensus by votes, commit new blocks to the blockchain and etc. Staking LUNA is the way that users that have LUNA in their wallets (Luna holders) which we call them delegators, can use validator’s full nodes to stake their LUNA tokens.in another words When Luna holders delegate their Luna to a validator, they are staking. And by staking they will be rewarded. a validator can delegate to itself which means can stake LUNA to its own nodes. And since maybe some users cannot run a full node, they can delegate their LUNA to validators.so when a validator has more staked LUNA it has more weight on the blockchain. the weight of a validator determines how frequently they can propose a block. Validators with a higher weight will propose more blocks, and in turn make more revenue. which means being chosen to mine the next block depends on total stake of the validator divides to total bonded stake across all validators.so validators with more staked LUNA, can get more blocks to mine and will receive more revenues. Part 2 In order to compare LUNA staking yield to LUNA price, I prefer to compare them for at least a month.to get a better vision I preferred to calculate staking yield for 1 LUNA in this period for each day. And here is the result.