Rocket Pool¶

Overview¶

Rocket Pool is a leading decentralized liquid staking protocol on Ethereum. It aims to solve the high barrier to entry for individuals running solo validator nodes (Solo Staking) while providing staking rewards to users who don't want to lock up their ETH.

Compared to other liquid staking solutions like Lido, Rocket Pool's most distinctive feature is its permissionless node operation mechanism. Anyone who meets the minimum ETH and RPL (protocol token) collateral requirements can become a Node Operator and run validator nodes for the protocol.

Rocket Pool launched on mainnet in late 2021 and has been committed to maintaining Ethereum's decentralization and censorship resistance properties.

Core Mechanism and Principles¶

Rocket Pool's architecture design elegantly combines the interests of regular stakers and node operators.

1. rETH Token¶

rETH is Rocket Pool's Liquid Staking Token (LST). - Value Accrual: Unlike Lido's stETH (rebase mechanism, quantity increases), rETH uses a value-accruing model. The quantity of rETH remains unchanged, but its exchange rate to ETH continuously rises as staking rewards accumulate. - Tax Advantages: In certain tax jurisdictions, the value-accruing model may have tax advantages over the rebase model (treated as capital gains rather than interest income). - Collateral Protection: rETH's value is backed by the total ETH in the protocol, and the RPL collateralized by node operators provides an additional insurance buffer.

2. Minipools¶

To lower the barrier to running nodes, Rocket Pool introduced the "Minipool" concept. - Ethereum Requirements: Traditional Solo Staking requires 32 ETH. In Rocket Pool, node operators only need to provide 8 ETH or 16 ETH (depending on configuration, LEB8 or LEB16). - Fund Matching: The protocol draws the remaining 24 ETH or 16 ETH from the deposit pool (ETH deposited by rETH users) and combines it with the node operator's funds to reach 32 ETH and launch a validator node. - Commission: In addition to earning staking rewards on their own ETH, node operators also receive a percentage (approximately 15%) of the returns from the matched ETH as commission, thereby earning a higher yield than Solo Staking.

3. RPL Token and Insurance Mechanism¶

RPL is Rocket Pool's governance and utility token. - Insurance Bond: When creating a minipool, node operators must collateralize a certain value of RPL (at least 10% of the value of their borrowed ETH). This RPL acts as "insurance." If a node is slashed due to being offline or acting maliciously, the operator's staked ETH is deducted first. If insufficient, RPL is deducted, thereby protecting rETH holders' interests. - RPL Rewards: To incentivize operators to collateralize RPL, the protocol distributes RPL inflation rewards to operators who meet the collateralization threshold.

Key Features¶

Decentralization: Node operators do not need to be whitelisted; anyone can join, which contrasts sharply with protocols that rely on curated node sets.
Low Barrier: Reduces the financial barrier for running a node from 32 ETH to 8 ETH.
Capital Efficiency: For node operators, leverage effects (using protocol funds) increase ETH-denominated yields.
Security: Over-collateralized RPL provides an additional layer of security.

LSD / LST: Liquid Staking Derivatives / Tokens.
Solo Staking: Running a validator node independently without an intermediary protocol.
DVT (Distributed Validator Technology): Technology Rocket Pool is exploring for integration to further reduce single point of failure risk.