Transcript: Stader Staking Weekly with Cephii


Finn 0:42
Hello and welcome to The Ether. Today is Thursday, January 13th 2022. This episode of The Ether is brought to you by Orbital Command, a community validator on Terra dedicated to educating, expanding, and promoting the LUNAtic community. Take advantage of their Terra Luna Intel Report on Telegram, bringing you the hottest news and updates on all things Terra everyday. Use the link in the show notes to find it. You can also support their community efforts by considering them next time you’re delegating or redelegating your LUNA. Find out more at TerraSpaces appreciates their support. Today on The Ether we have the Stader Staking Weekly Space with Cephii. Let’s take a listen.

Amitej 1:23
Deep expertise Cephii has so really, really kicked about the about today’s discussion, and happy to kick start about… I mean, let me just quickly give you an introduction about Stader, what we have learned so far, and then we’ll move into staking on Terra and beyond as necessarily, today’s conversation is all about that. And then why covering how Stader platform kind of helps ease the burden of staking for a lot of people, especially newbies, and in fact with our strategies, even for degens. On that note, for those of you who are not familiar with Stader or just heard of Stader as a passing platform, what we are trying to build is a smart contract infrastructure layer for staking across proof-of-stake blockchain or networks. Essentially what that means is we’re building these modular smart contracts that can be customized for several use cases. Examples of those use cases are, obviously, the one that is live today, which is the retail use case. We have two products live, one is simple stake pools where users have a choice to select their validator pools. We currently have three validator pools, Blue Chip, Community, and Airdrop pool. Depending on the individual’s preference, they can choose their own validator pool. And then we also have a product called Liquid staking product or a LunaX product, which is kind of aUST type of automatically compounding token that increases in value every day, while users or stakers on LunaX pool enjoy instant unlocking on the DEX while also being able to enjoy staking rewards as well as airdrops while holding LunaX.

Abram 3:17
Yeah, I think Amit just got cut off.

Amitej 3:19
Hello, can you hear me?

Cephii 3:21
Yeah, I can hear you okay.

Amitej 3:22
Okay, awesome. You didn’t lose me, right? Was I not loud.

Cephii 3:28
You were, yes.

Amitej 3:29
Okay, awesome. Yeah. So those are the two products that we have on this data platform right now. We launched on November 20th through the community farming. Obviously, there was a huge demand for stake pools and the community farming tokens of 2% of SD tokens got farmed pretty quickly. Right now consumers or users of Stader’s stake pools are enjoying autocompounding on their LUNA, as well as airdrops right in their Stader tab. What that means is essentially with Stader pools, you’re buying… I will actually hold on to the details about the DCA-ing of LUNA. I think Cephii is a much better person to explain that. So let me just take that cue to actually talk a little bit about staking on Terra ecosystem and beyond. Cephii, do you want to actually take that from me and kind of explain how staking rewards work on Terra, and how the staking rewards vary with LUNA’s price and the constitution of staking rewards?

Cephii 4:39
Sure, sure. So the way I understand it, again, I’m by no means a Terra code expert to tell you the exact mechanism whereby this works. Let me just kind of describe what I understand about staking from the perspective of a retail user for the most part. So when I first got to Terra, the first confusion I got into, of course, was where to stake my… Once I got to a wallet, next question became sort of, what are the ways to stake? Because obviously, you want to earn some yield off of your LUNA. And then the next question was, well, why am I getting all these little coins? There’s a mixture of UST, KRT, and MNT, and a variety of other international coins. I couldn’t, particularly for the life of me, understand why I was getting all the different coins precisely, or why the protocol decided to do that, but then kind of figured out okay, well, those are some of the fees being generated on the general network. And if transactions happen in KRT, or MNT, then some of the fees generated from those particular currencies is in my understanding why you get all these little small amounts of dust from each of them.

Cephii 6:04
If you have a relatively small amount of LUNA there, which in the beginning, that was the case for me, you get all these little coins and you’re getting such tiny amounts, that it’s almost irrelevant, and you have this tendency to convert most of these things to LUNA, or you have a tendency to claim them and convert them to UST or something like that, or perhaps use some of those various rewards, sometimes as fees. Sometimes I’ll leave my KRT there and use it for fees. So this is what I was doing before. But when you go to withdraw, you’re getting such tiny amounts, you feel like, well, I don’t really feel like withdrawing. Because it just creates a bunch of transactions for no apparent reason, which may not be worth very much. And then you’re getting a little bit of LUNA along with your staking. So there’s just basically a lot happening there. And just a lot of extraneous transactions, there’s a lot of manual process involved with pushing a button getting all those things and then combining all those to UST, and then whatever you’re going to do with it seem to be a lot of mishmash of work for no reason. And then if you’re paying taxes and such, then it gets even more confusing, because you have all these transactions. I have no idea how I’m going to do my taxes this year. [chuckle] Because there’s just a bunch of junk sitting in there. And it’s various different withdrawals I’ve made… Or not withdrawals, but claims I’ve made off my rewards. So it’s just kind of a messy process. And it looks like a process that was built to work really well except for when it comes to either tax time or keeping some record of what’s going on.

Cephii 7:58
So I was interested when Stader kind of announced that they were building a system that essentially would let you stake but then collect all this dust of different coins, and then subsequently, buy more LUNA with it, which is what I was doing anyway. So I was attracted to these sort of automation elements, which I love. Of course, I like anything that sort of automates things. It’s the… We’re getting into the getting towards the second third of the 21st century. And it seems like why am I pushing this button over and over again, I’d rather have anything that can be automated, automated is my sense. And so you can just sort of fire and forget and not have to look at it again. It’s also… Having brought on friends and family into Terra, it’s a lot easier for me to send them to Stader Labs where they can stick their coins and get autocompounding because, again, if this process is confusing for one person, it’s confusing for everybody. And the way it’s set up on Terra Station, you just have to… The biggest problem is you got to answer a dozen questions for people about how this all works. And that basically is… It just basically creates a more friction process for people to come on to Terra and use these systems. So those are some of the issues that I thought was kind of facing and was wasting a lot of time essentially trying to teach people.

Cephii 9:38
So Stader comes along, and then what you have the availability of doing now is basically instead of staking directly on Terra Station, you do so via the site. And what they’re basically doing is allowing you to sort of stake with different pools of stakers that they have partially pre-selected because of high uptime, which prevents slashing rewards problems. And we’ll go into that just a minute here. And then it takes all of those various points and just keeps buying you more LUNA, which is especially useful for the smaller user even more so than the large user, because if you’re a very big user, you may have tons and tons of money coming in through staking. Let’s say you had, $10 million on there, obviously, you’re pulling in tons of dust and tons of LUNA and you can sort of manually restake if you want. And then the fees are disproportionately small. But if you’re a small user, it’s like you’re wasting your money on fees, you’re wasting money on not having an optimized autocompounding, and all of that. So the way Stader has it set up, I see for myself, forget about the advantages of… Well, advantages to the validators and such. For myself, I look at it from the perspective of, okay, this is easier to use. I’m getting perhaps at least 0.5% or more of autocompounding gains that I would not have otherwise gotten, which of course, over the years, over, let’s say, a 10 year time frame, that autocompounding does make a big difference, 0.5%-1% here and there doesn’t seem like a big deal. But that really just increases over time, because if you believe what I believe I’m starting to sound like Morpheus on The Matrix or something. [chuckle] But if you believe as I do, then you have a sense that like LUNA is going to be much, much more valuable a year from now or five years from now. So those small 0.5%, 1% gains are very, very important, over a long term timeframe, which could result in a huge amount of increased value. So that’s kind of how I look at it is those small gains now are going to be worth so much later, that you’re going to wish you had them and that you autocompounded with the highest level of efficiency possible.

Cephii 12:28
So I was actually asking the gang some questions this last week, as far as the process whereby the system actually works, the Stader system. And one of the questions I had was, and maybe Amit now could kind of clarify, but what are slashing risks, so to speak? And how much of a risk is that to the average person who… And then and then perhaps what does Stader do to help mitigate for people slashing risk?

Amitej 13:03
Gotcha, Cephii, makes sense. I think it’s a very important question. A lot of people kind of do not realize the risks of staking or slashing. Though it is quite uncommon, there are different levels of slashing. To kind of simplify for easier understanding, the first one is very rare events where validators double sign where the slashing risk can be as high as 5% on Terra, on several other blockchains for such malicious… I mean even for non-intended malicious behavior, slashing risks can be as high as 100% when it comes to other blockchains like ETH, or for that matter, Fantom. So slashing is definitely an important concern that people need to be aware of, and also account for. That’s the reason why when we actually select validators for the pools that we have, we actually grade them very clearly based on performance, as well as slashing history. If we take Blue Chip pool as an example, it has a most stringent selection criteria. One is their uptime has to be 99.85% and above, during the last one month, and on top of that none of them should have any event of slashing, minute or higher intensity slashing event for the last six months. Or, sorry, for the last three months, and they should at least have six months of validation history on Terra. And then obviously, in order to promote decentralization, we have excluded validators who are greater than, I think, 2% voting power from the Blue Chip pool.

Amitej 14:52
We have similar stringent criteria for other pools as well so that we proactively minimize the risks of slashing. That’s on the selection side. And since, obviously, each of the pools has… The Airdrops pool today has three validators including Sam’s Orion Money. Hey, Sam. Glad you’re here. And then we also have a Blue Chip pool that has 10 validators. So when the delegations are spread across these multiple validators, obviously the slashing risks are even more minimized, because the delegation does spread across all of these validators. So that’s how the platform actually proactively minimizes slashing risks. On an active basis, we monitor the performance of all the validators in the pool, and actively figure out if any of them is slipping on performance, consistently, over 48 hours or 72 hour period. We redelegate the delegations from that validator to the rest of the validators in the pool. So these are the important measures we take.

Cephii 16:02
Amit, so the average person that kind of shows up, they throw their life savings into some validator, on Terra, specifically, what is the absolute worst that could happen to your money? I guess that would be my first question. Is it actually possible on Terra to have some situation where literally all your money disappears?

Amitej 16:27
No, the maximum slashing that can happen is 5% of the principal amount staked.

Cephii 16:33
Okay, so but it’s still pretty substantial as far as its effect on an individual, it’s a substantial amount there. So besides that, from a slashing perspective, have we seen on Terra… Based on your monitoring, what’s the worst slashing that you have witnessed so far?

Amitej 16:55
So we did have one of the community members who started a validator, I think, a few months ago. He’s witnessed 5% slashing. And then obviously, there were a few 5% slashing events in the history. Otherwise, the general, most commonly occurring slashing events are just to the tune of 0.1% or something like that. Some of these minute slashing events are common on Terra.

Cephii 17:23
Okay, and then obviously, everyone is interested in the issue of decentralization and such and for proof-of-stake, obviously that’s important. But I can’t get away from the problem of, from the average person’s viewpoint, their first most concerned about the sanctity or security of their own money. It’s one thing to abstract that to say, well, I’d like to “try to promote decentralization”, but the little guy doesn’t necessarily have… Or for that matter, even a large investor, for that matter, taking a 5% slashing risk on a large amount of money is going to be a problem. So I’ve always kind of found it interesting how the staker basically is taking some risk for the yield and the reward they’re getting, but it is very confusing to figure out how safe your money truly is in the whole grand scheme of things. So what Stader is basically attempting to do is to provide some consumer benefit. And then I think they’re looking at the possibility of institutional style staking and other things to their system. But for us, the individual user, I think their service is valuable. And, in my view, over time they’ll probably add more validators and such once more and more validators have a larger history to distribute the staking to wider variety of pools, wider variety of validators, once they can be pretty sure that they’re providing access to validators that are legitimately battle tested. Is that right?

Amitej 19:23
Yep. Yep, absolutely. So today, I think we have about 2021 validators across the three pools that we have on Stake Pools, all of them vetted for performance. One of the problems with… I mean, obviously, we all want to see all of the blockchain networks, especially Terra, to be as decentralized as it can get, right. But the problem is among the tiny validators or the new validators, how are you gonna make sure that each of these validators is performing well? For an average individual it becomes really hard to monitor as well as to evaluate the performance under these validators, right. Hence, most of the people choose the top 10 validators, or top 15 validators, or go by the brand named validators just to avoid any kinds of risks. So that’s where we come in. And obviously, we’ve selected a bunch of community validators, also the Blue Chip guys who are smaller validators yet decently performing ones. We had announced it a couple of weeks ago that we are also working on creating a pool of really small validators whose voting percentage is less than 0.3% so that people can comfortably stake with them because we have vetted for their performance and slashing history. So yes, I hope that answers your question.

Cephii 20:51
Yeah, no, I get it. And so I think if you’re just playing on Terra Station, and you’re just pushing some buttons, and you’re trying to stake, the reality is is like the entire process is extremely opaque. There’s very little dashboard information on the Terra Station app, for example, where a lot of consumers are going to access Terra. There is some data out there somewhere, but the reality is is we all know how crypto works, 99% of people have no idea what they’re doing, and certainly have no clue when they show up on a new blockchain that they haven’t used. What in the world is going on? What is the history of validators? What are the nuances between these things? It’s really, really opaque. I mean, it’s hard enough to… I look at it this way. It’s hard enough to research a particular blockchain, or a cryptocurrency, or a new project, it’s even more difficult when a lot of the nuances regarding slashing, the subject matter regarding validators and everything else, it just becomes very technical for most people. Most people just want to push a button and have number go up, right. They’re not interested in learning all these things. So I think these types of products are very important. So my thought of… So I have maybe 1/3 of my LUNA assets, I think, are parked in Stader at the moment. And I was personally in that community farming scenario where I was basically getting my SD tokens. And my understanding right now is that there’s also like a six month or so vesting period of my LUNA while it’s sitting there to sort of claim my SD tokens, so I’m watching for those. But I was just sort of watching the performance of the LUNA that I’m acquiring through the autocompounding process. Because there’s a page there on the site that allows you to either autocompound, all to LUNA, or there’s a little slider there, right Amit, where you can take some of the rewards as UST or something? How does that work?

Amitej 22:57
Yeah, so that’s… For people who are here who are not completely aware of the Stader platform, on the Stake Pools, there is a page, subsection called “Strategies”, that’s kind of the yield redirection strategies that we are going to build in the future. Right now, we only have two strategies, one is autocompound rewards, and retain your rewards. And then obviously, in the future, we want to expand this to several protocols. Some of the examples of what you can do with your rewards are, you can choose to partially redirect, let’s say, 15% of your rewards to aUST and deposit them in Anchor and automatically earn Anchor deposit rates. Or you can choose to redirect 30% of your LUNA staking rewards into, let’s say, a Spectrum pool or an Apollo pool, amplifying your yields. And then there are a lot of crazy things that you can actually do, right, like convert all of them into UST and then keep them as passive income to cover your working capital needs. So this entire Strategies section is essentially for the sake of yield redirection on top of your staking rewards. But currently there are two options for users, they can select to redirect their yield across these two options in any combination possible. You can basically set 100% of the rewards to be autocompounded, or you can set 50%, 90%, 0% of your rewards to be autocompounded while the remaining can be withdrawn at any point of time on the Stader dApp.

Amitej 24:47
So that’s kind of the overall context of this page. Right now, all the rewards that you’re getting, right now actually it’s about… Out of the LUNA staking rewards, about 30%, 40%… Last I checked, it was actually higher than 40% of the staking rewards are actually in UST and stablecoins, majority of them are in UST. So essentially what Stader is doing is every day, or every 48 hours today, based on the frequency of us swapping your stablecoin rewards into LUNA on a DEX, we are actually taking your stable rewards, converting them to LUNA and then restaking that. So essentially, what you’re doing is DCA-ing into LUNA with your staking rewards, periodically using Stader platform without incurring any gas fees. So that’s kind of what we’re doing with Stader.

Cephii 25:46
Yeah, and trimming all those fees certainly does help. And the way I look at it is some portion of… Can you review briefly the portion of rewards that usually come out as LUNA in terms of yield and how much is usually… In other words, simple staking, how much of the yield is coming out as UST, so people understand the proportions approximately right now.

Amitej 26:15
Gotcha. So I don’t know the exact number as of today. But based on my analysis that we have done about a few weeks ago, it was roughly about 40% of the staking rewards that were coming in UST and other stablecoins and 60% were coming in LUNA. The reason why Terra is a very unique blockchain is because Terra’s success depends on UST is adoption, right, it’s as simple as that. And most of us choose to pay gas fees in UST. So, all of that, a significant component of that is actually flowing through staking rewards. And obviously there is this seigniorage burn of LUNA that is happening, which is generating significant amount of UST and those are flowing in as staking rewards too. So we expect the trend to continue as hundreds of protocols start building on Terra ecosystem, and there is significant amount of transaction fees that are being paid out in UST. I do expect this percentage of stablecoin rewards to go up. Obviously, LUNA price also has a component to play in terms of the percentage of rewards that are paid out in UST and other stables. So as of today, it’s a significant amount of rewards being paid out in UST.

Cephii 27:37
So the way you can look at the slider on that Strategies page is you could look at it from the angle of, okay, I’d like to take for… Let’s just take the extreme examples on the strategies, you could take all of that in UST in which case it’s going to be the system is essentially in the background selling your LUNA and combining that with any UST that you’ve acquired. And it’s gonna provide the opportunity to, essentially, basically dollar cost average out of your staking rewards. But the nice thing about that is if you need to have cash flow, you’re not actually showing a LUNA taxable event to sell to UST, the UST is just sort of coming out as an income at that point, which is theoretically taxable in that sense, but you’re not having to worry about the cost basis of your LUNA. So that’s one of the advantages I see there if people need that functionality. On the other hand, the…

Amitej 28:36
Just one clarification, Cephii, here. So the strategy that you have mentioned is not live yet, but it’s very easy to implement. I just don’t know the tax component of it. It might be the case with certain geographies, so I don’t know yet about the taxes.

Cephii 28:55
Well, when when it’s when it functions where you can extract UST what it means is that it just functions as pure income at that point. It doesn’t necessarily… So for example, if I claim LUNA in most jurisdictions, and then I sell it, then I’m going to be making, claiming a taxable event… I mean, forming a taxable event against the first LUNA that I ever bought. So for example, if LUNA is $80 now, my first LUNA I bought was like $5, I might be, at this point, paying capital gains on the $75 gain that I made on my first LUNA. So this is the kind of issue… So it is a very important utility to be able to exit to UST directly and having it done in the background without recording to the blockchain a… Because this is all happening in the background, in the smart contracts without having to record the sale of LUNA. So this can be a fairly good utility for people who need to develop a cash flow position, essentially, ultimately. That’s kind of how I see it.

Cephii 29:54
Now the flip side is, what’s happening to your LUNA and UST otherwise, normally if you’re getting 60% of your gains in LUNA anyway, that’s not any different. It’s just being restaked for you in the background so that you now can earn yield on that LUNA that you just got. And then it’s taking all that UST on a daily basis, and KRT, MNT, all those coins, and it’s buying you more LUNA. So the proportionality… When the price of LUNA falls, the amount of UST you get does not change. It’s dependent more on the how many LUNA you have. So the good thing there is, as the price of LUNA falls, you’re actually getting more LUNA that day from the UST rewards. So that can sort of be a good thing for your autocompounder in that you are basically dollar cost averaging into LUNA’s price while it’s lower, which is kind of a nice feature. So you’re really optimizing buying, also, in a sense, of new LUNA with that money to the extent that that’s possible. Now, you could get into the math of is DCA better or dynamic DCA? If you were to just simply claim rewards normally, right, one option I could have was, if I had regular staking, I could technically take all those rewards, and only buy LUNA on the dips in theory, or something like that. But by and large, DCA works just as well for the most part. And that’s essentially what it’s doing for you in the background. So that’s sort of like what…

Amitej 31:27
Actually, an average user… I just want to add something here, Cephii. For an average user, if they have to do this claiming of rewards, and swapping those UST rewards into LUNA, the gas costs are going to be prohibitive. It almost costs about 0.4 UST to actually do this, per event. So it’s going to be a decently expensive affair. I mean, not mentioning the painful process of claiming all of these and then swapping all of them.

Cephii 32:03
Yes. So yeah, the smaller you are the more disproportionately painful the fees end up being is what he’s saying. And so that’s exactly true. So if you’re doing $1 million transaction, it’s 40 cents, or whatever, it’s not a big deal. But if you’re doing a $10 transaction 40 cents, it doesn’t really make sense. So what happens is, smaller users end up actually claiming their rewards less frequently, and therefore tend to autocompound much less frequently. So the impact is disproportionately higher or worse for the small user in that respect. So that is for the retail user, if all you’re trying to do is get staking rewards, I think Stader is the more efficient way to do it. So then, getting into a little bit of the LunaX, which is the product where essentially… So for LunaX, the idea is you have a liquid staking token to where it’s accumulating rewards, the value of the coin is rising similar to aUST if anybody has used Anchor UST and it’s sitting in your wallet, you’ll notice that it’s not worth $1, it’s worth more than $1. And in this case, LunaX should over time become worth more than LUNA because it’s actually accruing the value of the autocompounding system. Actually, I had a question regarding LunaX. And that is, where can you keep your LunaX, where Stader is going to be able to recognize that you’re earning sort of rewards on it? So for example, if LunaX is locked in another smart contract, is it still capturing that value? Or how does that work? I think it gets confusing to understand in what circumstances is your LunaX actually… Is a snapshots that are happening every week? Or how do you know how much reward and how much airdrops you’re getting? And what circumstances would you not get them with your LunaX?

Amitej 34:07
Gotcha. I think it’s a very deep question. So for the purpose of simplicity, let’s separate out the staking rewards and airdrops because the source of each of these is different. Staking rewards are actually, if you think about the entire stake pool, which is LunaX, The staking rewards are being claimed by the smart contract that is maintaining LunaX. And all those staking rewards, just like the stake pools, all the UST and all the stablecoins are converted into LUNA and restaked every day. So essentially what is happening is at the beginning of day, assume that there is 100 LunaX, and then 100 LUNA that got staked onto the contract. At the end of the day, assume that the staking returns are 10 LUNA. So essentially there is 110 LUNA in the staking contract. But then there is only 100 LunaX. That means the supply of LunaX has remained the same, but your LUNA that is backing it has increased by 10%. So, essentially your LunaX price will increase by 10%. That’s what you see on the Stader liquid staking dApp, where we update the price of LunaX every day. So, if you are… Actually, it doesn’t matter where you keep your LunaX. You can put it through any swap or Wormhole and take it to Solana, anywhere, but still the value of LunaX keeps increasing on Stata. If you have to realize that value, you can come back and unstake it on Stader at no cost. You will get the LUNA that is as per the exchange price that is going on on that day. But if you have to unlock it immediately, the only option to do that is currently TerraSwap, where you can swap that LunaX for LUNA instantaneously.

Cephii 36:05
Just to make it clear, Amit, for everybody. Because this is the question I think I’m trying to ask. So if you go to TerraSwap, for example, you have some sort of price for LunaX, and it tends to vary right, from moment to moment. To get the absolute maximum value out of that LunaX, let’s say, so you would have to go onto Stader site and do what? Hit the unstake button essentially? And then you get the precise lossless, I should say, value of LunaX, and that’s the only way to get it, correct?

Amitej 36:44
So it depends on the price on TerraSwap, to be very honest. If the price on TerraSwap is greater than the price of Stader plus 0.3% of TerraSwap commission, then you might end up getting a higher price for your LunaX on TerraSwap.

Cephii 37:02
Got it, okay, because I think when people are TerraSwapping, I don’t know that they fully understand that principle. Right now, it may not be a big deal, because LunaX and LUNA are not very different in price. But say for example, a year from now when LunaX’s value is worth 10% more than LUNA, you can’t just simply go and swap it and expect to have an understanding of the precise value. Because you’d have to really check Stader site, you’d have to check your site, correct? To know the precise… If you were to just unstake on Stader, that’s the true value of LunaX, right? Does that make sense?

Amitej 37:41

Cephii 37:41
Okay, the reason I was asking this is because different protocols and such that want to use LunaX in their various platforms… Because the whole point of LunaX is it’s a liquid staking token, and therefore the benefit of it is theoretically that you can trade the LunaX, while still getting a lot of the you know staking and airdrop rewards. And the time period that you’re either holding in your wallet or participating in some kind of trading, it’s accumulating value in the token itself. So just for folks, to be really clear, you’re not going to get the same benefit… Well, I should say, be careful when you’re just simply TerraSwapping LunaX, because you may not be getting the true value from it. ‘Cause I don’t know that the people that are playing on TerraSwap are necessarily paying close attention to the precise value of LUNA. So you could theoretically get LunaX cheaper than the true value on TerraSwap, and sometimes it might be more expensive. So that is something for folks to be careful about on that piece of the puzzle. I’ve noticed that to be a kind of confusing thing. Actually, in fact, even on the Stader site, I would say, you almost want to have some info page about how that works. Because it really is not obvious to, I think, most people.

Amitej 39:08
Yep, absolutely. Thanks a lot for the suggestion. We’ll be working on the product explainer flows, which will be live soon.

Cephii 39:17
Yeah, it’s almost like people should understand what benefits they’re getting precisely from using LunaX versus traditional staking. Because even LunaX, in order to unstake it, it takes… A true undertaking of it, it takes 21-24 days, right.

Amitej 39:33
Yep, it will take so much time, yes.

Cephii 39:35
No different than the simple staking in that regard, correct?

Amitej 39:42
Yes, that’s right.

Cephii 39:43
Okay. Okay.

Amitej 39:44
I just want to add something here. Today, if you see the price of LunaX is almost 1.009 LUNA. And generally the price on TerraSwap, ignoring really big drawdowns, typically it’s between 0.3% to -0.8% of the price that is there on Stader platform. Because if the price of LunaX goes outside this range, that opens up arbitrage opportunities for arbitragers. So typically, the price of LunaX should range between 0.3% to -0.8% of the price of LunaX on Stader platform. So what that means is in one year from now, when LunaX is, say for simplicity, 1.1 LUNA, the price of LunaX, even on TerraSwap would vary between 1.08 LUNA to… Sorry, 1.02 LUNA to probably 1.13, 1.14 LUNA. So that’s how the price on TerraSwap will also slowly increase.

Cephii 40:59
Yeah, and eventually, they’ll probably… Once the delta is wide enough, probably people will build some little arbitrage bots or something to take advantage of that. And that’ll help sort of maintain the peg of, say for example, an Astroport or a TerraSwap price of LunaX to the true value of LunaX on your site. But yeah, for now, folks just have to watch out. Now, one thing you could do on your site, by the way, as a slight suggestion is if, for example, if you use Astroport, and you’re trying to swap for something, for example, LUNA to bonded LUNA as an example, it actually shows you at the very bottom of the page in green or red, the percentage, either slip… Not the slippage but the percentage discount or penalty, essentially, from the true rate. So if you’re off peg, it would be nice to know, right on the Stader site, if you have the swapping mechanism right there, but it actually showed you, okay, I’m getting it 1% cheaper than it should be, or 1% more expensive than it should be. It’d be nice to be able to show right on the swap on the Stader page, what’s happening right there. Does that make sense, Amit? Because right now you have to go and check TerraSwap, and you got to check Stader, and then figure out, wait, am I getting the right rate for this? What’s going on? It’s really kind of tricky.

Amitej 42:20
Totally makes sense. That’s a great suggestion.

Cephii 42:23
So yeah, I mean, the reference would be maybe look at how Astroport does it at the bottom of their page, there’s like a little percentage. For example, if I’m getting… When I’m converting from LUNA to bonded LUNA, if I’m getting extra bonded LUNA, and it’ll say 0.8%, and it’ll be drawn in green, and you can tell you’re getting a discount, essentially. It’s something similar so that people don’t accidentally, you know, accidentally, you know, buy too high or sell too low or whatever, would be helpful.

Amitej 42:58
Yep, yep. Yep, totally makes sense.

Cephii 43:02
So, anyway, maybe you want to go ahead and open for some questions. I know, I’ve gotten a little bit into the weeds with that LunaX thing. But it was a subjective confusion for me. And I thought it was worth sorting that out for a moment. And it also helps for people to think about what my thought process is when it comes to evaluating these details, right. Because you might not think of these nuances. So sometimes these detailed questions sound like, “Well, are we just losing the general audience?” But at the same time, I think it helps, in a way sort of just like… Maybe the point of me being here, partly is so everyone can sort of understand how I got to where I’m at with using Stader, what my thought process is, and the technical details, and the types of things you might have not realized you’re missing while you’re sort of navigating all of this. Because obviously, the average user can get a lot of information directly from, say for example, Stader, the whitepaper, or any of their conversation. I tried to sort of bring maybe some element of technicality to it just because that’s sort of my thing. [chuckle] So if you get a nerd on it helps to let me nerd out a little bit. [chuckle] So, let me get to these questions. Let me get gudr on, he was sort of waiting here. And I don’t know if I’m pronouncing your name right, but go ahead, man. You have a question?

gudr doc 44:31
I’m okay for right now. I’m listening. I just wanted to have the capacity to ask you if I don’t understand something.

Amitej 44:37
Got you.

Cephii 44:38
Sure thing. Sure thing.

Amitej 44:38
I think one more question that you had, Cephii, which was around airdrops, I’ll just take a few seconds to explain that. The way Stader does airdrops for LunaX holders or LunaX LP providers today is that we take a random snapshot every week. And then based on that random snapshot, we find out which wallets are holding LunaX, and which wallets are providing LunaX-LUNA LP, and allocate the airdrops that were given on that particular week in the proportion of the LunaX holdings. That is how we do it today. So what that means is in the future, let’s say we integrate with… What that means is LunaX is actually leaving their wallets, and then getting deposited into the smart contract that holds LunaX as a collateral. So in the future, when we expand to or when we integrate LunaX to these wallet, these smart contracts, we take a snapshot of the LunaX holdings on these smart contracts as well, just like the TerraSwap LP, and those wallets that are providing LunaX as collateral will be eligible to receive airdrops and potentially Stader tokens as well. That is how airdrops…

Cephii 45:19
So what you’re saying is each protocol or whatever that implements LunaX, they have to integrate with you guys to claim all of their rewards and all of that? In other words if they don’t want to manually do this…

Amitej 46:14
They don’t have to integrate. We already have the node that takes the snapshots. We just have to input the contract address, and the node does the job.

Cephii 46:28
Oh, got it. Okay. Okay, great.

Cephii 46:31
Bernard, do you have a question?

BNardo 46:33
Oh, yeah I did. Great questions on your part, Cephii. Hey, hi. Can you guys hear me?

Cephii 46:43
Yeah, you’re good, go ahead.

BNardo 46:44
Okay. Awesome. Yeah, this is very informative. Just so happens I was unstaking from another pool. So I’ll be directing some of that LUNA to Stader. And I like the way you described it, Cephii, in terms of all this dust accumulation. So to drill down on that a little bit more, am I understanding that you can now specify that you don’t want KRT, and MNT, and so forth? You just want to receive either UST or LUNA? That’s my first question. And then the second question, because I’m driving, I haven’t really gone onto the site, but are there statistics sort of a dashboard that lets you know how much… What percent you’re actually earning or accumulating of LUNA or whatever it is that you’re actually receiving? Because you use the example, and I’m sure it was just an example of 10% for that day. I just wanted to know, how do you keep track of actually how much you’re earning in rewards?

Cephii 47:50
Well, currently on the site, it does show you just from my my user experience, it does show you how much LUNA you’re earning every week. The LUNA shows up I think, what, maybe every Tuesday, Amit, is that right?

Amitej 48:07
So it’s different for both the products. For liquid staking, you will be able to see the APY on the website, on the liquid staking pool. But if you’re choosing the plain staking pool, you can actually see the APR numbers against each of the pools. And that APR number is updated once in 48 hours. So you can see what is the percentage of LUNA rewards that you’re making.

BNardo 48:33

Cephii 48:35
Yeah, what I would be interested in too, in the future, would be like in a dashboard that maybe shows a comparator at some point. If someone had started on January 13th 2022, staking normally versus had they used Stader. Maybe have a little counter that shows how much more people are earning per… In terms of long term. Some sort of comparison would be helpful from some reference point, I think, for a lot of people. To be able to visualize it, I think, how useful is this in terms of autocompounding rewards. I think for many people, it’s not so much how much dramatically more you’re making with autocompounding, but the fact that you’re just like being maximally efficient to whatever extent that’s possible. The lower, by the way, LUNA’s overall yield is, the less important theoretically, mathematically at least, autocompounding becomes versus manually compounding every quarter or something. But right now, while LUNA’s yields are relatively higher for the next couple of years, I think it is pretty valuable to autocompound. Let me get mandiv on real quick. Go ahead.

Mandivs de’ Medici 49:55
Yeah, hey, Cephii, what’s up? How are you? So two or three things. First is just what Bernardo said, that single dashboard on the front page, how much you have invested, how much you’d gather. Otherwise, one need to go manage my holdings or portfolio or whatever the strategies, and then they’re able to see. So that’s one. Second, I think Cephii was mentioning earlier, LunaX and LUNA pool, if you want to get out early insta burn through TerraSwap, it’s not visible. It doesn’t see the LunaX pair there. So I don’t know why. I was trying to do that yesterday, and I couldn’t. So I just had to wait now because I think your commission expires on 20th of January. So I just said, “Okay, I’ll just wait for 5 more days, or 10 more days.” And then Prism starts on 25th. Yeah, Prism starts on 25th, so I have 10 days in between while I’m earning nothing, but that’s okay. And the third and last important question. I unstaked, or trying to unstake everything from Stader to go into Prism. So what’s your strategy to beat Prism? Because I’m pretty much confident that it will be a black hole for LUNA going forward. Unless you come out with a strategy to support yLUNA for LunaX, and then LunaX into Mirror somehow, like multiple layers, right? That’s what I’m thinking. Otherwise, one after the other, all will go unstake and go into Prism.

Cephii 51:44
Let me hit your mute because you’ve got some treadmill noise there’s something going on?

Mandivs de’ Medici 51:51
Oh, yeah, I’m walking. Sorry.

Cephii 51:53
Let’s cover some of those questions. So, Amit, first off yeah, the… Yeah, I mean, what he has mentioned about dashboards and such, I think are coming. There’s some thinking behind how to create those. But yeah, what are your thoughts on how the Stader and Prism interact? And what kind of theories have you guys put together on that?

Amitej 52:17
Gotcha. That’s an interesting question. So let me clarify that I think the way LunaX works is a little different. Because essentially, I mean, the reason why we chose the LunaX design was that a lot of LUNAtics would love to actually have the principle appreciation from LUNA, and maximize their LUNA rewards while staking. So LunaX does that and the utility of LunaX is different, where… You can go put LunaX… And potentially in the future with protocols like Edge or Mars. While earning your staking rewards, you are actually collateralizing the LunaX and then being able to further participate in DeFi, right, while at the same time all the time being eligible for airdrops, etcetera. So that is how LunaX is designed.

Cephii 53:14
And on the flip side, I would mention to people, there is a difference in how Prism works as well. So the yLUNA token, it’s not a liquid staked derivative. The value of yLUNA is not rising over time. So why is that different? Because if I’m going to, in the future, produce an aUST-LunaX rebalancer volatility arbitrage bot, and I’m going to get into some technical details here, but there are some definite products, or financial instruments, or machines that can be built using LunaX that cannot necessarily be done with yLUNA, because yLUNA is a more of a fixed staking solution, from what my understanding of it is. So they are different, and they’ll have different use cases as far as trading instruments, and as far as staking instruments. So I think these are some thoughts for people to consider. They’re not all the same thing. So there’ll be some interesting sort of possibilities also, within my view, and this is just, again, I’m not a member of Stader, this is sort of how I’m thinking this out as a degen, [chuckle] is that there are going to be interesting things that you can do perhaps with the combination of yLUNA and LunaX as well, because yLUNA is price is going to vary differently than LunaX. And there could be some interesting volatility arbitrage type things that you could do there while still earning… In other words, you can use LUNA as a trading instrument and have… Getting some additional yield off the various volatility. And I might be able to use LunaX with yLUNA in this context. So yeah, I think if you start using your imagination, what’s going to happen is there will be some interesting new things built using combinations of these things. So don’t assume one is necessarily, “better than the other”, but they have complementary features, I think, is how I look at it. Amit, any other theories there or how you want to…

Mandivs de’ Medici 55:32
Yeah, my concern was… Not a concern, but just a thought. Pre-Prism era, LunaX is perfect, whatever it’s supposed to be built, right, and it’s doing what is supposed to do. But post-Prism, that might change. Or if it doesn’t change, then it might be a survival instance at that time.

Cephii 55:55
No, but they’re not the same thing. The way you have to think about this is… Because yLUNA’s price also is going to vary on its own. So yeah, the refracting process is slightly different than what these guys are doing. And, yeah, there are maybe pros and cons to this, by the way, but in general, Stader’s role is just a little bit different. You just have to kind of… There are some details. But yeah, no question. I think even Amit would agree, there’s going to be all sorts of different competing ways to do staking types of strategies going forward. But Amit, maybe you could comment briefly about what’s your thoughts are for staking with other chains and such, right, because there’s gonna be some interesting possible strategies that emerge, is my thought.

Amitej 56:49
Yeah, definitely. So one of the… As we speak, we have been working on several other blockchains. So one of the interesting pieces that we can build in the future are these ETFs, which are basically these cross-chain ETFs, composed of several assets. Example is 30% Solana, 40% Terra or LUNA, and 30%, 40% ETH, right. So essentially, people can just simply stake with this product, and then get exposure to all of these underlying assets while earning staking rewards. So some of these products are in the works. And then obviously, at the same time, we are in the conversations with other protocols to build integrations where the yields can be redirected from either other protocols to buy LUNA or LunaX, or from the LUNA stake pools to buying other protocol tokens. So several possibilities exist. And we have been working on some of them already to make them a reality.

Cephii 58:00
Got it.

Amitej 58:01
Cephii, you had you had certain interesting observations as well, on this front, right.

Speaker 1 58:07
This room is gathered by white pants denim and iconic fashion brand, providing jeans that mimic the aesthetic of…

Cephii 58:15
So there’s trolls showing up. So let me make sure I kick some these people. There’s a couple of known trolls, I just had to boot off of there. So sorry about that. So yeah, what he was saying was that with the addition of cross-chain assets, you’re going to be able to do some neat things like take yields from one coin that you think is are interesting, say for example, ATOM, and you might be able to buy SolanaX or something like that. So there are some other additional theoretical possibilities coming forward as we do this. This should be pretty cool. Let me get Dan and then danku for a minute. Dan, what’s up?

danb 58:55
Hey, guys, I just hope that we could rewind a second back to the airdrops. Can you talk a second about if you guys are able to support the one-time airdrops too. If we were staking a significant amount of window with Stader, and something like Orion, or something like Astroport came out, where they’re giving a one time drop to LUNA Stakers, are you guys capturing that?

Amitej 59:19
Yeah, definitely. I mean, the specific protocols that you mentioned have taken the snapshot especially I think Astroport took a snapshot before we launched Stader. So the to answer your question, even one time snapshots are captured by Stader, especially if you have been staking with Stader at the time of snapshot capture. And also when the protocols are distributing the airdrops based on snapshots, you will be eligible to receive those airdropped.

danb 59:51
Great, awesome. And can you also explain one more time for me the 3% fee and what service you’re getting for that?

Amitej 1:00:03
Okay, sure. So, just for your information, during the first two months of stake pools, the fee is 0%. The 3% fee will be applicable after Jan 20th. And the key benefits of Stader platform are… There are three major benefits. One is we simplify validator discovery by vetting the validators and monitoring their performance actively. That’s one. The second one is basically we claim all the rewards, staking rewards per se, including all the stablecoin rewards, UST, KRT, all of them, convert all these stablecoin rewards to LUNA at zero cost for you. And we stake that with the Stader pools. What you’re essentially doing with this is DCA-ing into LUNA every two days or every day depending on the frequency at which we are compounding. And then on top of this your LUNA is compounded every day. That’s the second major benefit. The third major benefit is basically we are claiming all the airdrops on behalf of you, and then you can obviously claim all of these airdrops at one go in one transaction. For all of these we are charging 3% of the staking rewards a our fee.

Cephii 1:01:24
And that’s, Amit, 3% of the staking rewards, or 3% of the autocompounding rewards? Or what fraction of the actual…

Amitej 1:01:37
This is 3% of the staking rewards, mostly deducted from the UST rewards.

Cephii 1:01:44
Got it. Got it. danku, you want to hop on?

danku_r 1:01:49
Hey, thank you.

Amitej 1:01:51
Hey, danku, hi.

danku_r 1:01:52
I appreciate all the questions. Hey, Amit, how are you?

Amitej 1:01:54
Doing great.

danku_r 1:01:55
And Cephii is doing an amazing job asking… [chuckle] That’s good to hear. I hope so, now that the farming is over.

Amitej 1:02:04
No the farming is not over. The liquid staking farming is ongoing. The LunaX-LUNA LP is ongoing.

danku_r 1:02:14
Yeah, that’s. But that’s why I wanted also to quickly hop on in terms of what Mandivs was kind of saying. I think Prism and Stader are very different also from a tax perspective, I always enjoy, Cephii, when you also reflect on that we are degens, you said it earlier, right. And we also need to think of that staking is often the simplest thing for people and institutions in the future, right. So they will not go in Prism, refract their assets, understand what they need to do with yLUNA and pLUNA. I think those are two different solutions. Also, I mean, if I in Germany go with my LUNA to Prism and refract it, I need to, as you said, Cephii, earlier because of… In Germany, I pay tax, right, on my LUNA. If I put it on normal Stader staking and get the compounding rewards and get rid of all the stablecoins, it’s not a taxable event for me, I think those are different use cases, right. And that’s why there’s the power of Stader coming from… Go ahead.

Cephii 1:03:14
Yeah, the tax efficiency is very important. Because you basically… If I’m paying taxes in most countries, what happens is is I really only have to pay taxes when I withdraw any LUNA at that point from the rewards that I’ve accrued, but I can do it all at one time. I could have it run for years and not have to pay withdrawal rewards while getting the autocompounding benefits. What Mandivs was saying is like, hey, I’m just gonna take my $10 million of LUNA or whatever. And let’s just make up some high number just for kind of fun. So what would happen is if you went and… Let’s say you bought LUNA at $5, and now it’s at 80 bucks, and you decide to go split it to yLUNA and pLUNA, most jurisdictions, that’s going to be a taxable event, and you now are paying capital gains on $75, or whatever. So that is something for people to understand if they’re planning on paying taxes or whatever. That’s true of most countries and jurisdiction. So danku’s point is well taken. There are situations where that’s not entirely…

Cephii 1:03:15
How is LunaX treated from a tax… Sorry, Cephii. Please go ahead.

Cephii 1:03:56
No, so there are some countries where what I’m saying is not true. But most places, that’s how capital gains is set up. They’re not going to know what the… Well, first off, yLUNA and pLUNA will be substantially differently priced from LUNA, obviously. It’ll be something like… So in that situation, it’s going to be an obvious taxable scenario, there’s not going to be any way to really get around it. It’s a very different price. It’s a very different asset. Whereas, for example… And then even for that matter, if I convert from LUNA to LunaX, in theory, depending on how you do your accounting, that’s theoretically a taxable event too. But if you just simply stake, that is not necessarily… It’s entering a smart contract, and it’s just sitting there, it doesn’t count as a sale of your asset or anything. And so, yeah, there’s a very significant tax efficiency element to Stader. And danku’s right. It’s not an automatic thing that everyone should be going and playing in Prism necessarily. It’s going to depend on your situation.

danku_r 1:05:24
And also for LunaX, I think, Amit, you were asking that at least what I can reflect for most of the European countries, if you basically go now staking with LunaX instead of the normal staking at Stader, it’s also a taxable event, right. Because LunaX is basically an accruing token. Basically also like aUST to UST, should be the same. It’s not the same for bLUNA-LUNA, right. Because the yield that you’re getting from bLUNA, you need to claim it separately. So only the claimable event of that one is still relevant. But LunaX that is autocompounding in itself, it’s basically first time you get it, unfortunately, at least for myself, I need to pay tax.

Amitej 1:06:08
What can you explain this to me? So how is it treated in terms of, because it’s not a token that increases in volume, right? It’s a token that increases in value?

Cephii 1:06:21
That’s correct. So because it increases in value, it behaves no differently than a stock. So imagine I have stock in Microsoft and it’s worth $100, and then it goes up to $200, then my capital gain is the $100 difference in growth, right. But it doesn’t… Or similar to an ETF, or a mutual fund where the value of your mutual fund symbol, it goes up in value so the capital gain is just the difference between the two. So it’s pretty simple in that regard too.

Amitej 1:06:57

Cephii 1:06:57
Yeah, it’s not that different that just LUNA by itself in that regard.

Cephii 1:07:02

Amitej 1:07:02
So in your jurisdiction, Cephii, if for example, you’re holding LunaX, and you will potentially incur a taxable capital gains event, when you exchange that LunaX for LUNA or another asset. Is that right?

Cephii 1:07:19
Yes. I mean, especially if there’s a… You’re not going to probably get away with anything like-kind exchange, if it’s dramatically different value, right? If it’s almost 1:1, probably someone’s gonna say, oh, yeah, sure. I get it. It’s a very close exchange, and it’s some sort of… Because there’s not a lot of rules regarding all these stupid different things that we do and DeFi that it’s a little bit nebulous. But yeah, with all these things, it all depends on your particular area what you think you can defend in an audit, that’s a different story altogether. But if I were buying LUNA today, and I just simply bought LunaX, the theoretical benefit would be all I have to do is just sell it at some point in the future not have to have a whole lot of compounding related transactions, and I could stay liquid if I need to trade it or something like that. So yeah, but for most people, I would say the simple staking is going to be the right answer on Stater. It just does its job. The fees are nominal. Maybe you don’t have any particular needs for liquid staked LUNA or LunaX. LunaX is going to be a specific instrument for specific types of transactions and whatnot. And if you don’t know what you’re going to use LunaX for, don’t get LunaX, just stake normally on Stader is how I would think about this. So once you figure it out you have some reason to use LunaX for some sort of particular trading reason or something, then start worrying about that.

Amitej 1:08:56
Yep, I think you’re right. A lot of people actually ask this question even on our Telegram or Discord groups, for people who want to just stake for longer time periods. And who don’t need the flexibility of having liquidity on their staked assets should just stake with the stake pools and be done with it. But for people who prefer the flexibility of having liquidity, while also being able to enjoy airdrops and staking rewards, LunaX is the right token. And obviously, as and when we add more and more integrations on top of LunaX, like the Mirror integration, or Edge, or Mars integrations, that’s when the power of LunaX will truly be unlocked.

Cephii 1:09:45
Let me get Jay on for a minute. Jay, are you there?

Jayljl 1:09:49
Yeah. Thanks for having me on. Hi, guys. My question is about the Stader token utility and its impact on decentralization, because I see your litepaper, there’s this part about the Stader token enabling preferential delegations, right. So that means validators can stake the Stader token. And then a percentage of the delegations of your stake pools will be proportionally allocated based on the amount of Stader token staked, right. And that really draw parallels to the Curve Wars right now where protocols are fighting for the Curve tokens to to redirect Curve use, right. And now validators can essentially buy Stader tokens, and then redirect where the stake pools go to. So would that impact decentralization? Just want to get your thoughts on that.

Amitej 1:10:40
So I think what you’re saying is basically, if we had a single pool, which has all the 120 validators, then obviously there is a potential impact on decentralization. But what we have enabled is several validator pools that have the ability to take delegations and then split it across several validators, right. So what we what we mean by the commentary in the white paper is essentially, in a particular pool where we select validators who belong to a particular category, they need to compete to stake Stader tokens. Even though they need to hold and stake Stader tokens, we don’t give 100% of the delegations in the same proportion of their Stader tokens staking, we give only a percentage, say, for example, 50% of the delegations will be allocated equally across all of these validators, while the remaining 50% will be allocated based on their staking of Stader tokens.

Cephii 1:11:47
One thing I would sort of remind everyone about the theory of decentralization. It’s one thing to say everyone has a philosophy that we should all have decentralization and that’s how proof-of-stake should “work”. But what gets really weird is, what is the theoretical future versus what is the actual reality? And this is the same problem in economics and government where, for example, you’ll have proponents of a economic theory of, say for example, socialism, and then you’ll have another economic theory of, say, capitalism, right. And think about it this way. Let’s say for example, you’re a proponent of socialism, or… And I’m not saying you should or shouldn’t be, I’m just saying… Let’s say you’re a proponent of one or the other. So here’s the thing. So let’s say for example, I were to build you a smartphone. And the smartphone that I built you is not very good, right. Let’s say, it’s not a Google phone, it’s not an Apple phone or whatever, it’s just something and I built it. And you might think to yourself, hey, you know what, I’d like to buy that for idiot’s phone because I believe that the two behemoths in the tech industry are monopolizing the whole world, and they’re going to have a tech hegemony, and they’re gonna check all my private data, and therefore, blah, blah, blah, right. You have a variety of reasons why we would love to see a dozen smartphone operators, create a dozen great platforms, and tons of shit to choose from.

Cephii 1:13:39
But the real universe is there is this tendency towards centralization. And what nobody has worked out, not in government, not in tech, not in anything, is the ability to fully decentralize things in a manner that remains consistent over the long term. There is a tendency for money to be magnetic, because here you are the individual user, and you’re left with the decision of, okay, do I want this validator who’s slashed six times 5% over the last year? Or do I want this pro validator that has performed perfectly? When it comes to when it comes to your personal money, what you’re going to end up doing as individuals is you’re going to make decisions that are basically good for you. Many people aren’t going to throw, say for example, $1 million at a validator who’s doing a shitty job because in a sense, yeah, you could believe in the socialization of validators and say, you know what, that validator’s got to eat and they’ve got to have… But at the same time, the capitalist theory is gonna say, well, you’re gonna end up punishing the guy who’s not actually giving the service that they claim they’re gonna give you. Because at some level, that becomes theft, right. Because if someone says they’re going to be a good validator, but they’re not.

Cephii 1:14:54
So all of these problems exist, and I think there’s no perfect way to solve all of them in the flair of decentralization, because if you give voting power to a shitty validator, for example, you wind up with just the same problems that you’re trying to avoid, to some extent, right. So it doesn’t necessarily promote… What everyone wants in a utopia is you want 100 different Apple smartphone manufacturers, all with different brands, all that are interoperable, all that work perfectly, all that have as good a security as the other. But in the real universe, it’s almost impossible to marshal the resources to have that happen on a consistent basis. So from a proof-of-stake philosophical standpoint, I don’t know what the solution to all this is. The way I look at it as, theoretically, a retail customer that I’m going into staking is, I want a solution that sort of works for me. And if I can do so with some… Like for example, the Community Validator pool that’s available on Stader that has some of the different community validators, these are validators that have been clearly productive in providing a service to our community, they’ve created websites that help the community track performance of the Terra network and such. So I actually like to throw some of my staking into the Community Pool, because I think they’re providing value to me. They’re not charging me for that either. They don’t force me to go and… In other words, in order to use Smart Stake’s website, I don’t necessarily have to validate with them. So it’s sort of like we are donating in a sense to those community validators, because they provide a service we think is useful. So that’s a little bit of how you have to think about this.

Cephii 1:16:38
But anyone that wants to promote decentralization by purposefully putting their sort of money in a less, than stellar validator or whatever, that’s entirely up to everybody. But if you think about it, if you automatically create a system that, like Amit said, if you… Let’s say for example, they decided they’re going to just basically make one massive pool, and everyone’s money just goes into that. And all of the money just goes into all the different validators without any concern for their performance, right. Let’s say you just average everybody out. Then what happens is you get decentralization, but the problem that you end up having is, is that there is no actual mechanism then for a validator to have to perform well, because if they’re getting paid no matter what, right, they can just screw around and do whatever they want, right. So you see the problem? Any sort of attempt to force decentralization has perverse outcomes also. So the way I look at the all of these systems is, it’s like a survival of the fittest. It’s like evolution to some extent. The socialists don’t like to hear survival of the fittest, because they want to save everybody. And the capitalists, the problem is survival of the fittest works, but then the argument the socialists will make is that it leaves certain people behind in this process. And at the end of the day, nature sort of sorted this out already, in that survival of the fittest is the way the world works for the past 5 billion years. And my sense is on the long run, philosophically, all this will work itself out. And proof-of-stake networks are going to have to figure out, maybe, specifically methods to improve decentralization, but it’s going to be very hard for you as the individual, or for Stader or to solve all of the decentralization problems, or for that matter, be necessarily the ones that are at fault for all of the centralization problems. So it’s a really tough like issue that everyone’s always thinking about but no one ever has a solution, right. It’s the same as government. Everyone thinks they have the perfect answer, but yet nobody lives in a utopia at this point, right. So anyway. So Logan, questions or anything? Logan, are you there?

logan shippy 1:19:06
Yep, I’m here. So I have a question regarding the

Amitej 1:19:11
Hey, Logan.

logan shippy 1:19:12
Hey, what’s up guys? Question regarding the potential throughput of the Terra blockchain when things really start to operate at scale, because when we look at Solana, you look at Ethereum, you look at a lot of these blockchains out there, we’re at what, like 10% adoption of crypto in totality. So like what happens to Terra as it goes from a $10 billion market cap to $100 billion market cap, when it comes all these transactions that are going on and whatnot. Obviously Kadena is boasting, “Oh, we solved the trilemma.” Can the Terra blockchain handle, true scale?

Cephii 1:19:58
Yeah, when it comes to proof-of-stake networks, it really depends on a mixture of things. But yeah, these are problems that can very much be solved, just like they can be solved in traditional networks. It’s a matter of sizing the node power, bandwidth, it’s a matter of investment by validators in more infrastructure. It’s also protocols themselves, if they start getting really busy, they’ll have to invest themselves into nodal architecture and stuff. So yeah, it’s got to scale over time. And the more profitable various protocols, and the busier they get, the more they’re going to have to spend on infrastructure and such. So yeah, you’re going to have slow downs over time in various sectors of the blockchain, not necessarily the entire thing, but different sections, like let’s say Anchor, for example. You’ve all noticed that in times of when it’s really busy, Anchor can slow down a bit, right, because it’s a heavily used section of the system. So that’s something that you have… If you’re finding that you’re… Especially with certain protocols and such, you’re finding that it’s running too slow, they tend to monitor these things, but it’s certainly something to message them about if you’re finding slow reaction times. TFL, in general, that was the kind of that Project Dawn initiative to help increase the background infrastructure and bandwidth to handle this. So yeah, all of it’s scalable, but it costs money essentially. And that’s the simple way to look at it, Logan. Whereas in a proof-of-work network, it has a lot to do with increasing the number of proof-of-work miners, and scalability has different… There was a lot of different ways to solve the so called scalability problem. And in proof-of-stake, it’s very much solvable. It’s basically endlessly scalable, you just have to spend a lot of money.

logan shippy 1:22:07
Got it. So is there ever, let’s say, a scenario that takes place to where the Terra blockchain is just getting overwhelmed, it’s congested, it’s like Ethereum, gas fees are high? Do you ever see a situation like that take place? Theoretically, do ever think it gets as bad as Ethereum is with gas fees and whatnot?

Cephii 1:22:32
I doubt it. Because basically, proof-of-stake is just much cheaper than proof-of-work long run. And because we have our gas fees, and UST, and such, it is very possible to… They’ll eventually get to a point where, let’s say, by inflation, for example, the dollars not worth as much. And maybe the gas fees will be increased per regular inflation, if the validators aren’t profitable and such. So those will be votes that come up, and then the gas fees and such will be raised. So yeah, it won’t be fixed gas fees where they are forever, because obviously, there’s inflation that has to be taken into account. But that’s all scale… The fees are very much scalable, and they’re uniquely better scalable on Terra than they are on other chains where you have to use the core asset of that chain. Like for example, Avalanche and Solana, you have to spend your actual value accrual token as your actual gas fee, which sort of is…

logan shippy 1:23:26
Yeah it’s ridiculous. Why would you wanna spend an asset that’s gonna increase by 5x-10x? That all adds up.

Cephii 1:23:33
Yeah, it’s not so much that it’s ridiculous. What it is, is that many chains, unlike Terra, they use their primary token. Their primary token utility is either right now to stake it and get rewards or their primary token utility is to use it for gas fee. So therefore, that’s part of why those tokens have value is because you have to hold them to spend them, right, at some point. Whereas the LUNA-UST ecosystem is very, very different and it’s just unique in that respect. Most chains don’t have this structure, essentially. So let me get B U B B L E S on for a second, too. B U B B L E S, are you there?

B U B B L E S 1:24:15
Morning. Good day can you hear me?

Cephii 1:24:17
Yeah, go for it.

B U B B L E S 1:24:18
Okay, so my LUNA just became available so it’s liquid now. I planned accordingly to take advantage of the arb, or the LUNA-bLUNA, but I’ve been watching over the last 72 hours and it doesn’t seem to give as much opportunity. So now in the meantime, while I wait for other opportunities like Prism and whatnot to to come to market. I’m just really trying to understand this LunaX a little bit more. So I know if I join the LP pool on Stader that there is still a 21 day, 24 day unbonding period. But if I just go to TerraSwap and swap my LUNA for LunaX, is my understanding correct that it’s still liquid and I still get airdrops for just…

Amitej 1:25:13
Yes, yes. Even if you stake your LUNA on Stader, you will mint LunaX, you are still eligible to receive airdrops as well as the staking rewards. The difference of the unbounding period only comes when you choose to unstake on Stader rather than swap on TerraSwap.

B U B B L E S 1:25:33
Oh, interesting. Why that would be… Interesting. Okay, is there any…

Cephii 1:25:40
That’s why, B U B B L E S, we’re getting to those technical details of how LunaX actually works and how they , measure your airdrops and all those nuances, right. So yeah, just TerraSwap. Just be careful in the sense that you want to make sure that the price is actually pegged pretty close. Otherwise, you end up… That’s what that conversation earlier is about. Just be very diligent with… Especially if you’re buying a lot of it or something. Be very diligent as far as slippage and other scenarios that can happen.

B U B B L E S 1:26:18
Yeah, that was my next question is about the loss aspect. So let’s just say hypothetically, I just use like… Somebody has, let’s say, 1,000 LUNA, and then they convert them over to LunaX. So they’re probably going to end up with 90… Let’s just say, 998 or 997 LunaX tokens? Let’s say they held those LunaX tokens for a period of six months, right. When they go to revert back to LUNA again, as long as there’s no spread discrepancies, they should arrive back at about 1,000 LUNA again, correct?

Cephii 1:26:18
You wanna answer that, Amit?

Amitej 1:26:56
Yeah. Can you repeat that please? I lost your last two sentences.

B U B B L E S 1:27:01
Okay. So if you… Let’s say somebody has 1,000 LUNA, and they convert it over to LunaX, so they’re going to be roughly about, let’s say, 998 LunaX. Let’s say they held that in their Terra Wallet for six months, when they go to convert back to LUNA again in the future, will they arrive… Should they arrive pretty close to that 1,000 original LUNA again? Or is there a loss in regards… That’s what I’m trying to understand now.

Amitej 1:27:32
So if you’re doing that on Stader, there is no loss. So for example, let’s take an example of today right LUNA to… One LunaX is equal to 1.009 LUNA. So let’s say, you give you have given 1.009 LUNA to take 1 LunaX. Now you take that LUNA, keep it in your wallet for six months, take that 1 LunaX, keep it in your wallet for six months. After six months, ideally the price of LunaX should increase by 5%, assuming staking towards is 10%, right. So that means your one LunaX should be equal to 1.009 into 1.05 which is 5% increase in the LunaX place.

B U B B L E S 1:28:24
Okay, so you still have the exposure still there.

Amitej 1:28:28
Staking rewards, right. When you come back after six months and unstake on Stader, you will be eligible to get a LUNA equivalent of LunaX at the exchange rate that is prevailing on Stader after six months

B U B B L E S 1:28:45
And then, so if we just hold LunaX in our wallet, we still then will arrive to the Anchor website, or wherever there’s weekly airdrops, and then we should get an alert that says there’s an airdrop available? What happens if you’re just getting the airdrops by just holding LunaX in the wallet? What happens with all the other coins like UST and whatnot? Does that automatically get pushed into the wallet or do we not get that aspect of it? There’s only just the other airdrops?

Amitej 1:29:17
So all the UST and stablecoins are converted to LUNA and restaked every day.

B U B B L E S 1:29:24
Just by holding LunaX?

Amitej 1:29:27
Yes. The DCA into LUNA automatically happens. When it comes to airdrops you can come to the Stader of platform and collect those airdrops, all of them in a single click. You don’t have to go to each of the protocols.

B U B B L E S 1:29:44
Okay, so I still have to use this… I’m not trying to… I’m not anti Stader or anything I’m just trying to understand. So I still would have to… Because I’m on the liquid staking, I’m under Pools right now and I see Stake and I can do you know a portion… Yeah, I can switch over… Unless I enter the pool, the liquidity pool, I’m not tied into a 21 day, correct?

Amitej 1:30:06
Even the liquidity pool, you are not tied into a 21 day. If you’re planning to provide LUNA-LunaX liquidity on TerraSwap, you’re not tied into a 21 day, you can take that out whenever you want.

B U B B L E S 1:30:22
But then when I click on the unstake button on the liquidity stake and it says, “Unstaking takes 21-24 days to unlock LUNA.”

Amitej 1:30:30
Okay, so this is specifically unstaking the LunaX.

Cephii 1:30:31
That’s for the LunaX portion.

B U B B L E S 1:30:34
Yeah, that’s what I’m trying to understand is about the LunaX aspect of it.

Cephii 1:30:39
Yeah, to get the perfect value… That’s what we were talking about the previous hour is that to get a perfect extraction of the total value of your LunaX, yes, the ideal way to do it without… Where you’re certain it’s a lossless event, is you literally physically unstake it, just like you burn bLUNA. If you try to TerraSwap LunaX to LUNA, you’re at the mercy of whatever valuation that TerraSwap happens to have at that moment. That’s the difference. Yeah, TerraSwap as an AMM is not a particularly efficient system, which is why all of us arb this thing to death. But yeah, it’s gonna vary from moment to moment. That’s what you have to be aware of. So yeah… But there’s nothing locking you into the LP though, you can exit the LP… In fact, I did, for example, had to do that. I had a substantial amount of LUNA-LunaX in my LP on Stader. And I needed the LUNA that was in that, not the LunaX, but I needed the LUNA in there suddenly because I wanted to be able to borrow off of it when LUNA dropped to $60 or whatever. And so I exited the LP for that reason. I still have whatever SD token accumulated in that and I didn’t mess with my LunaX at the time, because I don’t want to inefficiently sell it, right. So I just basically left my LunaX alone. And then I borrowed off my LUNA because that was efficient for me at that moment. So you can get in and out of the LP whenever you feel like it. It’s just how to exit the LunaX token itself is a very specific strategy. Okay. And then when you…

B U B B L E S 1:32:24
Go ahead.

Cephii 1:32:25
So when you burn it, it’s just like burning bonded LUNA in a sense. On Stader’s site, when you hit unstake, there’s a page there where it shows you how much LUNA you’re getting, and when you’re getting it back, right. And that’s how I… If I’m going to exit LunaX, I’m going to do it on Stader’s site, not try to do it on a swap mechanism, generally.

B U B B L E S 1:32:45
Right, right, right, I guess going forward as the Terra ecosystem grows, where we’re going to be running into these situations where you’re not even on payroll, Cephii, and you’re divulging… You’re almost full time on Twitter just helping us out right now. But it becomes to a point where there’s going to be people… I’ve been in the Terra ecosystem now for nine months, and I follow the posts and I follow the tweets and whatnot, I try to stay up to date. But there has to be some sort… I’ve gone to the Get Help section on the Stader webpage. And that’s just not even for Stader but as a lot of other protocols that are coming, either we have to spend a little bit more time on help guides or having a video each… Like Stader would have to put out a video of each topic, each section on the website so that people like myself or others, we don’t have to wait for these AMAs to pop up to get these…

Cephii 1:33:44
Sure, and actually, danku’s here. And I think Panterra from Terra Bites is here. So some of these folks do produce videos over time.

B U B B L E S 1:33:55
Oh, yeah. I watched those as well. Yeah.

Cephii 1:33:56
Sometimes they do get lost in the shuffle. And it might be good for… Sometimes it might be good to have one created, and then maybe the video linked via…

B U B B L E S 1:33:57
Implemented onto the website in like HTML or something.

Cephii 1:34:08
Onto the website. Yeah, there’s kind of a plus or minus to that. Because technically speaking, some of the YouTube channels are more community channels, they’re not directly linked to these various companies. And that I think can work for some sites and it doesn’t work for others. Because the responsibility of what is said on those videos then becomes indirectly tied to the company involved and all that. So there’s pros and cons to that. And also there’s pros and cons to making the websites really, really messy with lots of content. So yeah, there’s always a back and forth when it comes to education. And that’s why…

B U B B L E S 1:34:48
I mean, I guess the struggle’s real, right. I mean…

Cephii 1:34:51
Which is why it helps Amit to hear all these various concerns that we have, because if it’s confusing to you and me then it’s confusing everybody probably. And they can use that feedback to then build on that a little bit.

Amitej 1:35:04
Yep. Feedback totally taken.

B U B B L E S 1:35:06
Okay, thanks.

Cephii 1:35:07
Yeah. So I’m sure they’re taking notes and hearing all these issues so that they can kind of make it clear for people in the future.

B U B B L E S 1:35:13

Cephii 1:35:14
Let me get Cloud on maybe for a second cuz he was waiting… Oh, Amit, did you have a point? Sorry.

Amitej 1:35:21
No, I think it was Patrick, who was trying to talk.

Cephii 1:35:24
Oh, okay, or Patrick.

Patrick Wylie 1:35:26
Yeah. I just had a quick question. Marinade on Solana, which is essentially what’s Stader’s doing but on Solana. SOL price has gone up because of the value accrual on the background that’s happening with you staked Solana. Do you think it’s possible once the… Come live on Astroport, that maybe the value accrual to LunaX will make swapping directly from LunaX to LUNA more of a straightforward path? Because on Marinade I can just, boom, I go right up… SOL, and have my value accruals.

Amitej 1:36:02
Patrick, you we’re cutting out a little bit.

Cephii 1:36:04
I think what he was asking is the ability to eventually swap from, say for example, LunaX back to LUNA, is it going to be more efficient in the future, and maybe with use of Astroport and more liquidity, I think is what he’s getting at. You’ll get to a point where it will actually be easier to swap back and forth from the liquid token. I think that’s basically true, Patrick.

Amitej 1:36:26
Yep. That’s completely right, Patrick, and thanks for answering, Cephii. We’ve been trying to figure out a way to use stableswap on Astroport that makes the slippages very, very low. I think, on Solana using Sabre, which is a stableswap exchange, the mSOL to SOL swaps are very efficient. So we could definitely move to that model very soon.

Cephii 1:36:52
Yeah, let me get Cloud on next.

Cloudunetwork 1:36:54
All right. Hey, everybody. I really appreciate you letting me speak. I’m actually coming from the… I’m really interested in the Cosmos ecosystem, and big on IBC and seeing… In terms of like… I know you’re… Okay, so I wanna… The main focus, I guess, that I’m thinking about in terms of… To, I guess, validator… You mentioned something about decentralization and talking about validation. And you’re trying to put trust on validators, but I think we kind of need to redirect our focus on something like securing the network and having that a priority. And so if we have those shitty validators, I don’t think it really matters, because they’re not really getting the rewards that really good validators are getting. And yeah, so that was my first thing with what you were saying about validation, talking about there’s an issue with having to… Decentralization of validators and Cosmos is really focused on securing the network, they have a lot of validators. But someone said something in their community talking about it’s really important to secure the network. And it doesn’t really matter if there’s a validator who’s not doing good. I mean, yeah, it does if you have bad eggs in there. But in reality, those validators are not gonna get rewarded and they can obviously… For doing bad behavior. Yeah, that’s kind of like what I… There’s more that I want to talk about in terms of stablecoins. I want to bring up… I mean, if you take a look at… So ION, in the Osmosis pools…

Cephii 1:39:07
Let’s try to stick to the discussion that we’re having here, which really is very specific to staking… Yeah, the validator concerns of decentralization, these aren’t necessarily problems we’re gonna solve on this call today. It’s sort of… Like what I said before, it’s a perpetual problem forever. So there will always be some community initiatives that will be needed to promote either decentralization, or either punishment, or building up validators who are doing a good job. All of that is sort of part of the incentives within the network. And anytime we stake we’re basically… Essentially casting a vote for a validator who’s doing a good job, in theory. And that’s really the only thing that you and me can really do besides going to the forums and providing and community feedback. And then maybe creating community proposals to make changes if we think something has to be done differently. So that’s really the forum to really do that in, I think. We’re probably not going to solve all of those problems in this forum. So let me get some more specific questions related to Stader from folks. Broland, are you there?

Cloudunetwork 1:40:22
Yeah, thank you so much.

Cephii 1:40:25
Yeah. No problem. Yeah. Broland, are you there?

Broland 1:40:29
I am. Good morning. Can you guys hear me?

Cephii 1:40:31
Good morning. Go ahead. Go ahead. Yeah.

Broland 1:40:33
So my question is regarding voting when staking on Stader. Are anybody who’s currently staking on Stader, are there any plans to have the ability to vote on Terra governance? Or at least show, I guess, a voting record of the pools or the validators that we’re in?

Amitej 1:40:58
Yep. So if I… Just trying to rephrase your question, what you’re trying to ask is, is there a way for us to capture the voting history of the validators and show it on the app? Is that what you’re asking for?

Broland 1:41:14
So yes, but ideally, I would still want the ability to vote on Terra governance.

Amitej 1:41:21
While staking with Stader, is that what you mean?

Broland 1:41:25

Amitej 1:41:27
Okay, gotcha. We are definitely working on that. In fact, in one of the proposals, which we have submitted on the Mirror forums, detailing the integration of Mirror and Stader… Sorry, Anchor and Stader, we have shared a link to a doc, which clearly specifies our plans around how can we enable voting for stakers who are staking with Stader validator pools. So that is definitely one of the top priorities. However, it’s a bit technically complex. So we might take a little bit of time to enable that, but it is in the roadmap.

Broland 1:42:05
Awesome. Good to know.

Cephii 1:42:07
Actually Amit, I just realized the time, I’m gonna have to drop off, if you want to take over and see if any further questions are around.

Amitej 1:42:15
Yeah, I can take the last three questions, Cephii, you can drop off. Thanks a lot, Cephii.

Cephii 1:42:23
Yeah, good having you guys. Yeah, catch up with everyone later. Alright, bye.

Amitej 1:42:28
Guys, I can take a few questions for another 10 minutes. Please go on. CryptoMoneyLife.

CryptoML 1:42:39
Yeah, hey. With the redelegation feature at the base layer, will we ever be able to move from a staking pool directly into LunaX?

Amitej 1:42:49
I mean, trust me, we would love to actually have that feature. Unfortunately, since both of them are two separate contracts, it will be really difficult… It’s technically at this stage, infeasible to support redelegation across stake pools and liquid staking even across stake pools. Let me also give you the background for why that is the way we designed it. Essentially, stake pools is a smart contract that enables delegators to choose a set of validators. Like for example, today we have three validators who are giving airdrops. Tomorrow there can be a set of 10 validators that are giving airdrops that could be forming 50%, or maybe 60% of the staking rewards. So that’s kind of a flexibility we have provided for stake pools. Hence, this is a separate contract that enables it to do a bunch of automations and yield redirection strategies. And while the liquid staking is really meant for a different use case, which is take your LunaX, provide liquidity, and take your LunaX, put it as collateral on Mirror or other protocols like Edge, or Mars, etcetera. So essentially, these are two different smart contracts designed for different purposes. It’s technically not feasible at this stage.

CryptoML 1:44:16
Okay. Okay. Yeah. Thanks. That it.

Speaker 2 1:44:20
Amitej, could I ask you a question?

Amitej 1:44:21
Thanks for asking. Please go ahead.

Speaker 2 1:44:24
So I’m just starting to get into the staking. So I’m wondering… I’m in the US. And I’m wondering in terms of the tax reporting aspect, because it’s a lot of transactions that would have tax implications. Is there like an API that would hook up to, let’s say, TokenTax that would just report all the stuff that happened on your platform, Stader platform, so that I wouldn’t have to get into the weeds of having to collate it all and provide it to a tax prepare.

Amitej 1:45:00
Yes, I think it’s a great question. We do actually expose our API to two or three of the institutions who were staking with us. Maybe you could DM me after this call. And I can connect you with our tech team where you can draw data from that API.

Speaker 3 1:45:20
Hey, Amitej, can I ask also?

Amitej 1:45:22
Please go ahead.

Speaker 3 1:45:24
Do plan to integrate the airdrops across the wider ecosystems of the Cosmos? For example, there was some Convex airdrop right now, and the Shade also make airdrop. So I just want to ask you if you’ve plan something different than just the LUNA. Sorry, than the Terra.

Amitej 1:45:44
Yes, we are actually working on all the IBC airdrops that are coming in as well. You should be able to see those very quickly. However, I have to tell you that the airdrops for which snapshots were taken earlier than Stader’s launch, we will obviously not be eligible to claim those airdrops. You will have to individually claim those airdrops using your wallet. And any airdrops that were as a result of the snapshots taken after Stader’s launch, you will be eligible for claiming those. However, at this stage, the cross-chain airdrops that are accruing to stakers on Terra are really miniscule. We’re also hoping that there will be significant portion in the future, hence working towards having that feature available on Stader.

Speaker 3 1:46:31
Thank you very much. And you also save like a lot of headache with all the different wallets and stuff. So thank you very much.

Amitej 1:46:36
Thank you. Thanks a lot. Anybody else? ddegen?

ddegen 1:46:42
Yeah, Amit, thanks for hosting this. So I have a really quick question. Could you talk about the math between unstaking for the 21 days on LunaX versus swapping LunaX for LUNA on TerraSwap? Just to make sure we’re not losing out on any kind of arbitrage?

Amitej 1:47:03
Sure. So essentially… Are you familiar with how LunaX works?

ddegen 1:47:08
Yeah, yeah.

Amitej 1:47:11
Okay, so since you already know that LunaX is a aUST type of a token that increases in value with respect to LUNA. So on Stader dApp, everyday LunaX price compared to LUNA increases. So essentially, at any point of time, you can come to Stader dApp and get the same exchange that is mentioned on Stader dApp on that particular day, and get an equal amount of LUNA. This process takes 21 to 24 days to be eligible to claim LUNA. While at the same time, you have the flexibility to swap out your LunaX to LUNA on a DEX. Here, because TerraSwap is a xyk DEX, which is basically it always make sure that the x, which is the asset, LUNA, and y, which is the asset LunaX, the product of that is always constant. It’s the same Uniswap v1 concept that exists on TerraSwap. So, because the DEX has to always maintain these assets in this particular proportion, there is a potential slippage that users can incur when they try to swap one token versus the other. Especially in the trades or in large quantities, the slippages can be higher. But if the trades are in smaller quantities, the slippages are obviously lower because xyk balances with minute differences at lower quantities.

Amitej 1:48:41
Now, the actual loss you might incur in case of a swap depends on the quantity that you’re planning to swap. This specific use case where people try to swap LunaX to LUNA is when they are trying to protect or exit themselves from the LUNA position as their expectations are that there could be large drawdowns in LUNA price, right. So, it’s for those swing traders and high frequency traders who want to exit LUNA position quickly. So for them these small slippages, even at slightly larger quantities, do not matter. For really large trades, for example 10% of the pool size trades, the slippages will be significant, because xyk should be maintained in proportion. I hope that answers your question. I try to make it simple without going into the math. Ddegen? Can you make ddegen one of the speakers?

Abram 1:49:45
Oh, yeah, sure.

Amitej 1:49:46
Yeah. So one way to sort of avoid this high slippages is to move to a stableswap pool. Thankfully Astroport has such stableswap pool. We’re working with them to migrate LUNA-LunaX pool to stableswap pool.

ddegen 1:50:02
Gotcha, that makes sense.

Amitej 1:50:04
Thanks, ddegen. I can take two more last questions. Marty?

marty schoffstall 1:50:10
Thank you. So I think like many people here, I don’t like to keep a whole lot of LUNA, normal LUNA in my wallet. I like it to be LunaX, or bLUNA-LUNA or staked or pick your poison. But I do like LUNA off-chain. And it would seem increasingly so. And specifically for me and Osmosis, not that I don’t have it in other places as well. So I’m back to my lobbying of basically LunaX showing up inside of Osmosis, and all the LunaX sudo magic kind of happening there. But now you have places like on the Sol space, Orca interested in LunaX now that they’ve moved to LUNA and UST, now actually in aUST. The bridges like ABR, which I can’t even pronounce their bridge name. But could you comment on that a little bit? Thank you.

Amitej 1:51:24
Yeah, we are actively working on taking LunaX to cross-chain. Especially while we wait the launch of some lending protocols on Terra. We’re actively working with the likes of Solend, Apricot to take LunaX cross-chain. That might be a reality very soon. Does that answer your question, Marty?

marty schoffstall 1:51:44
Absolutely. Thank you very much.

Amitej 1:51:46
One last question, please.

Speaker 4 1:51:48
Yeah, can I ask a question please?

Amitej 1:51:51
Please go ahead.

Speaker 4 1:51:53
Apologies to everyone, I came a bit late to this Space. So if this has already been covered… But when everything launched, I wasn’t really sure what to… Where to put… What pool to go into. So I took a bunch of LUNA and I split it up evenly between the Blue Chip, the Community validators, and the Airdrops in the plain staking. And then I took another third of my LUNA and I put it into the liquidity pool. And then I had to add more sorry, until Lunar X. And then I had to add liquidity. And I took another third and did that. Added liquidity on to that. So I’ve got all of my LUNA… Or the portion that I have for Stader, I’ve got it in thirds. And so really, my aim is just to acquire more LUNA, that’s all I want to do. So even were quite a long way into this stata thing. But I’m still confused as to where I should have really… Which one I should have focused on if all I’m trying to do is acquire more LUNA. So out ofm say for example, with the plain staking out of those three options, which should I have chosen? I still don’t really know that.

Amitej 1:53:06
Gotcha. So thanks for asking this question. A lot of people do ask this question. Essentially plain staking, the reason why we have three different pools is to give some of the users who prefer different pools to give them some choice in terms of selecting the validators. If your objective is to just maximize LUNA, I think the APY on LUNA staking rewards is almost equivalent across the three pools. So you’re fine just as is. Nothing significantly is going to be different for you. On the liquid staking… So if you want to just maximize your LUNA and don’t want to worry about Stader SD rewards, you should take out the LP and completely stake LUNA to LunaX.

Speaker 4 1:54:00
Oh, okay. And will I keep… So I’ll keep the the SD tokens I’ve accrued though.

Amitej 1:54:10
No, if you do it before February 9th, you will lose all of them. If you do it after February 9th, you will continue to vest 50% of them.

Speaker 4 1:54:18
Okay, so I thought Cephii I said he removed his liquidity pool part of it. And he retained his SD tokens. I thought that’s what I heard him say.

Amitej 1:54:29
Gotcha. No. So these were the vesting terms just for us to incentivize people to have a long time horizon to come and stake with us. However, obviously if you want to get hold of some of the SD tokens, you should retain your LunaX-LUNA LP

Speaker 4 1:54:54
Yeah, I mean, I’m intrigued to find out how much they are worth. I did ask in Twitter, what date will we find out how much an SD token is worth. But no one responded. So I mean, it’s a valid question where one is intrigued how much an SD token will be worth. Do you have any idea?

Amitej 1:55:14
I think, just hold on for a day or two, there is a big announcement that is coming in. So unfortunately, I cannot reveal more details than that at this stage. I can only tell you that you are farming SD tokens close the price of our seed round.

Speaker 4 1:55:31
Okay. The other thing was once the thing to keep people in it, one of the incentives was… Because people are gradually start pulling out from a certain date. And I thought the saying was they lose some of their SD tokens for pulling out after a certain date, and then it gets spread around to everyone who stays in, is that true?

Amitej 1:55:53

Speaker 4 1:55:54
So therefore the fixed amount I’ve in the standard staking portion of Stader, that should start increasing from a certain point?

Amitej 1:56:05
Yep, absolutely.

Speaker 4 1:56:07
All right. And the other thing was, I swear, I thought it had increased because I went in and my figure had increased, but then it went back to a fixed amount. Did I imagine it? Or was there some sort of error that happened? Or is it…

Amitej 1:56:24
Is this plain staking pools?

Speaker 4 1:56:26
Plain staking, yeah. I commented… I sent a message through DMs in Twitter. And someone from Stader got back and they said, “Well tell us your Terra address.” And I provided that and then they got back to us, said, “Sorry, we can’t help you just go to our Telegram. And we’ll sort you with screenshots of proof that this happened.” I was like, I wasn’t gonna, I don’t know if I could…

Amitej 1:56:51
I’m so sorry, you had to go through this. Let me explain the mechanism by which you had farmed the staking rewards. So essentially, we were showing the SD tokens farmed at every six hour intervals based on the prevailing LUNA price in the market. What happened just a few weeks ago was LUNA price suddenly shot up by almost 40%. So the data in terms of the SD tokens that were farmed that you were seeing on the dApp, were anchored to the actual prevailing price of LUNA at that point of time. That’s why you are seeing a slightly higher amount of SD tokens that were farmed. But when we actually did the swap, we do the swap based on the average LUNA price since the last swap, so hence the actual SD tokens farmed by you would have been slightly lower.

Speaker 4 1:57:50
Okay, all right. Cool. Yeah, yeah. Yeah, they could… Whoever was manning the Twitter for Stader could have probably just said that in the DMs. But yeah, is it safe for me providing someone with my Terra address? Because I’ve done that now through the DMs on Twitter and I was just a bit spooked by it.

Amitej 1:58:11
As long as you are doing it on official channels, there is nothing to worry about, whether on Twitter DM, or Telegram support, or Telegram DMs to admins, you are fine. But I would advise not to provide your Terra Wallet address to anybody who is directly messaging you for it or anyone who is not officially verified on the Telegram channel or Twitter channel.

Speaker 4 1:58:40
Okay, well, yeah, I just was so confused why they asked for it. And then when I provided that, they just said, “We can’t help you go to our Telegram.” Yeah, so that was a bit… Alright.

Amitej 1:58:53
Sorry about that.

Speaker 4 1:58:54
I hope I don’t get robbed. Okay. But apologies to everyone else who had to listen to my questions. Thanks very much. Thank you.

Amitej 1:58:59
No problem. Thanks a lot, guys. Unfortunately, I have to step out. This was a great AMA. And thanks for patiently listening to us. And also asking a lot of questions that you might have. What I have realized, and my key takeaway from this AMA is we have to do a lot more AMAs, at least one AMA a week, to answer some of the questions that you might have. And we will put that process in place starting next week. Thanks a lot. Thanks, everybody, for attending this and making this a great success. Alright, Abram, can you take over just come through and I’ll drop off.

Abram 1:59:39
Yeah, so I think we’ll catch up again next Thursday with Cephii. And hopefully we can deep dive on a single topic, and that we can take it in a different direction. And hopefully it’s another interesting conversation like this. So yeah, see you guys. We’ll update you on the schedule and the timings. So catch you all next Saturday.

Finn 2:00:06
Thanks for checking out another episode of The Ether. That was the Stader Staking Weekly Chat with Cephii. Recorded on Thursday, January 13th 2022. This episode of The Ether was brought to you by Orbital Command, a community validator on Terra dedicated to educating, expanding, and promoting the LUNAtic community. Find out more at TerraSpaces appreciates their support. For, I’m Finn. Thanks for listening.