Terra staking rewards based solely upon transaction fees as of Dec 26

Terra’s subsidized block rewards are coming to an early close on December 26, 2019. However, Terra’s payment network has grown rapidly, and the recent Columbus-3 network upgrade included a transaction fee rate increase of nearly 5-fold (from 0.11% to 0.5%). If this growth continues, we should expect staking rewards from transaction fees to overtake the value that the block reward subsidy provided.

Though the commitment was stated to last for one year (beginning in August 2019), Figment is supportive of this decision because it is more in keeping with Terra’s design. We’re happy to see the network progressing as intended — with usage generating staking rewards, rather than the inflationary block rewards that other networks depend upon.

Rather than earning LUNA as a staking reward, you will only receive a portion of the Terra stablecoins that the payment network processes, such as KRT (South Korean Won Terra stablecoin). If your preference is to have LUNA instead, you may convert your KRT into LUNA using Terra Station’s swap function. Here’s the Terra team’s official announcement about the change.

What will happen to the remainder of the LUNA earmarked for staking reward subsidy? Our understanding is that these funds will be transferred to Terra’s community pool, a recent addition via the Columbus-3 network upgrade. The community pool will be used to fund governance-based community spend proposals approved by LUNA stakers, which we anticipate will be used to support Terra-based projects.