Rocket Pool

What is Rocket Pool (RPL)?

Rocket Pool is a decentralized Ethereum staking pool that lets users take advantage of their decentralized node operator network or run their own nodes with a reduced amount of ETH to stake.

A first-of-its-kind ETH proof-of-stake protocol designed to be community-owned, trustless, and permissionless, Rocket Pool was first conceived in 2016 and has had over 5 successful public betas during ETH2 development.

The protocol is truly decentralized in that it is not beholden to any one party and is instead governed by a network DAO enabled by the RPL token. As a platform, its goal is to embody the core ethos of Ethereum and DeFi, especially the non-custodial nature that allows self-sovereignty to thrive.

Who are the Founders of Rocket Pool?

Rocket Pool was founded by David Rugendyke, a senior developer with a background in computer science. He serves as the CTO of Rocket Pool and actively works on Ethereum Solidity.

How Does Rocket Pool Work?

Ethereum relies on having thousands of validators, making it both decentralized and extremely secure since each node needs to deposit 32 ETH to the protocol. However, these factors also present would-be stakers with two major entry barriers: technical know-how and cost.

Operating an Ethereum node can pose significant challenges to users without a certain level of technical capability, especially given that validator nodes then must be maintained in a certain way and achieve a certain amount of uptime. On top of that, 32 ETH is not a small amount for the layman, especially in a financial climate of increasing costs and stagnant wages where wealth creation is monopolized by the already-wealthy.

Rocket Pool solves these two issues handily by offering service packages targeted at two broad groups of users.

First, Rocket Pool allows anyone to join the Rocket Pool decentralized node operator network, allowing the staking and running of a node with a deposit of only 16 ETH. This model does require a significant amount of capital, though lower than that, to stake directly on Ethereum. It is, therefore, also suitably incentivized with a higher ROI, with users able to earn commission from staking pool ETH and RPL rewards from providing RPL collateral.

The second user group is far broader in scope, allowing anyone to sign up with just 0.01 ETH. This is a form of liquid staking, with users receiving the rETH liquid staking token when they deposit ETH to the protocol.

These rETH tokens accrue staking rewards over time, and, importantly, node operators do not handle funds. Any penalties incurred by node operators are taken from their earnings rather than those of rETH holders.

Given the lower entry barrier of a low minimum deposit and the advantage of liquid staking, users in this category can expect a lower ROI than those who run a node and stake 16 ETH.

Aside from close to 2000 decentralized Ethereum node operators, Rocket Pool also utilizes a unique decentralized Oracle DAO network for the protocol connecting the beacon chain to the ETH1 chain.

Meanwhile, all of the protocol’s components are connected together on Ethereum by trustless smart contracts. These contracts have been audited by Sigma Prime and Consensys Diligence and are open source for all to analyze.

What makes Rocket Pool Unique?

Rocket Pool’s protocols support various actors, including independent node operators and service providers. This means that Rocket Pool can be used by Staking-as-a-Service (SaaS) providers as well.

With Rocket Pool, these SaaS providers and independent operators maximize their return by being paid to run a node both in ETH and RPL. In addition, the protocol allows teams to run their own infrastructure and use Rocket Pool to trustlessly stake ETH in batches of 16 coins.

Rocket Pool also uses the rETH token, which represents a tokenized staking deposit and the rewards it gains over time. This token crucially provides Rocket Pool users with liquidity as Ethereum continues to roll out its PoS form, where staking deposits are locked.

How is the Rocket Pool Network Secured?

Rocket Pool is a protocol atop the Ethereum blockchain that works toward the greater security and decentralization of Ethereum itself. It is one of the most popular liquid staking and decentralized node platforms, and its continued success helps to secure Ethereum and, therefore, by extension, itself even more.

What is the Use of RPL?

The RPL token is the primary protocol token of Rocket Pool and is used in protocol governance as well as for staking on a node as a form of insurance.

When creating a 16 ETH minipool validator in the protocol, a minimum of 10% of that ETH value must also be staked in RPL as a security promise. This becomes collateral, so if the node operator is penalized or slashed and finishes staking with less than 16 ETH, their collateral is sold to help compensate the protocol for the loss.

The more RPL nodes stake as insurance, up to 150% of the staked ETH value, the more RPL rewards the node operator receives.

How Much RPL is In Circulation?

With the philosophy that any value-generating protocol needs to reward its participants, the RPL token features a 5% annual inflation rate. 70% of these newly issued RPL tokens go to node operators staking RPL as insurance collateral, while 15% each go to Oracle DAO members providing Oracle data and the Protocol DAO Treasury.

Given this annual inflation feature, the supply of RPL isn’t fixed. It is currently over 19 million RPL, with a circulating supply of over 10 million tokens.

How Do You Buy RPL?

As an Ethereum-based token, RPL is extremely easy to buy. You can find it listed on almost any Ethereum-based decentralized exchange (DEX), including leading names like Uniswap and Balancer.

You can also find RPL listed on almost all major centralized exchanges. These platforms offer RPL for various currencies, from fiat to stablecoins and even BTC.

How Do You Store RPL?

To stake RPL as insurance while running a node or just espouse the non-custodial ethos of Rocket Pool and Ethereum itself, you can store RPL tokens in a wallet. Since it’s an ERC-20 token, plenty of wallets can store RPL, whether they’re browser extension wallets like Metamask or hardware wallets like Ledger.

Is RPL a Good Investment?

Ethereum, as a platform for decentralized applications, is the most popular of blockchains by a long, long way. The network effect and dominance it has achieved in this domain are remarkable, and decentralization is one of its most fundamental elements.

Rocket Pool helps decentralize Ethereum even further, and it ensures that it remains safe and secure. More importantly, it provides an avenue for many other actors to get involved in Ethereum staking, whether by operating a node or simply staking a small amount of ETH.

If Ethereum leads the blockchain industry into the future and continues its revolutionary march, then protocols like Rocket Pool will surely have a seat at the table.