Rocket Pool

Rocket Pool is a decentralized Ethereum staking platform.^[1]^[4]^[5] As of October 2022, the protocol has more than 292,736 Ether staked with around 1,659 node operators and a Total Value Locked (TVL) of $650.11 million.^[8]^[9]

Overview

Rocket Pool offers two methods of staking Ethereum staking and running a node which requires a minimum of 16 ETH half the amount needed to run a node or just staking which requires a minimum of only 0.01 ETH. ^[8] Rocket Pool's smart contracts have been audited by Sigma Prime, Consensys Diligence, Trail of Bits, and Immunefi Bug Bounty. ^[21]

Staking + Running a Node

Ethereum holders can stake Ethereum and run a node with Rocket Pool. Stakers earn both ETH rewards from staking and variable RPL token rewards for providing RPL collateral. The solution is permissionless and allows stakers to run a node by staking 16 Ethereum which is half the minimum needed to solo stake Ethereum. ^[20]

Staking

Rocket Pool also allows Ethereum holders to stake with as little as 0.01 ETH. Ethereum holders can deposit as little as 0.01 ETH and receive the rETH liquid staking token. rETH accrues staking rewards over time. The solution is decentralized as a decentralized network of node operators earns rewards for rETH holders. The solution is also non-custodial since node operators do not handle funds. Any penalties incurred by node operators are taken from their earnings rather than rETH holders. ^[20]

RPL Token

RPL is the native token of Rocket Pool with a total supply of 18,000,000. It ensures that the system remains trustless, and decentralized and that the community can govern the way it functions. As a form of insurance, RPL can also be staked on a Rocket Pool node.

Since the operators stake RPL, they also receive an additional reward of the same token. This is created by the administered inflation. Operators can stake as much as 150% of the staked ETH’s value. New RPL tokens are minted every 28 days; a period that is called “checkpoint.” RPL is distributed to node operators in exchange for operating on the network. According to Rocket Pool, it purposely manages a 5% inflation rate of the RPL token.^[13]

In November 2021, a new Rocket Pool protocol token has been released and the old Rocket Pool token could be migrated using the Rocket Pool staking website.^[19]

Token Allocation

S/N	Distribution	(%)	Amount
1.	Founders & Project	15%	2,700,000
2.	Investors	54%	9,720,000
3.	Premined Rewards & Airdrops	31%	5,580,000

rETH

Rocket Pool ETH (rETH) is the protocol’s liquid staking token. The rETH token represents an amount of ETH that is being staked and earning rewards within Ethereum Proof-of-Stake. As Rocket Pool node operators stake, the resulting rewards increase the value of rETH relative to ETH.^[19]

Launch

Rocket Pool first launched on Ethereum mainnet in November 2021 when the Beacon Chain was a separate chain that ran in parallel to the main Ethereum Proof of Work chain. Later, Rocket Pool became an Ethereum Proof-of-stake (PoS) infrastructure service compatible with staking in Ethereum after The Merge. The team originally had the release planned for October 6th but decided to delay that due to the discovery of an ETH2 staking issue. This issue was discovered through their bug bounty program and it would have affected not only Rocket Pool if it launched then, but it also affected several live staking platforms as well.^[14] In its first two days of operations, Rocket Pool had registered 237 node operators across 42 global locations, with 1,088 ETH staked.^[7]

Mainnet Rollout

The Rocket Pool mainnet launch was a staged rollout gradually increasing the protocol’s total value staked. Rollout occurred in 4 short to medium-length phases. Each stage limited the number of minipools and the size of the rETH deposit pool. Once the minipool limit was reached new node operators were not able to deposit until the next phase. Once the rETH deposit pool reached its limit, stakers were not able to swap ETH for rETH until the next phase.

Redstone

Redstone is the name of the Rocket Pool release that includes The Merge compatibility. The Redstone smart node and smart contract release happened before the Ethereum Merge.^[17]

Priority Fee Distributor

After The Merge, smart node operators and their minipool validators became responsible for creating blocks, and in doing so, they began receiving priority fees (also known as tips) which are attached to each transaction. This new distributor made sure these fees are split between the node operator and rETH liquid staking users, just like Beacon Chain rewards previously.^[18]

Rewards System

Node operators in the Rocket Pool protocol were previously required to stake RPL as an insurance promise to the protocol. If they incurred serious penalties, then their RPL stake was penalized. Node operators who staked this RPL were also rewarded every 28 days from the protocol for providing this insurance. With the Merge, nodes have to make an on-chain claim every 28 days and the gas fees depend on how busy the Ethereum network is at the moment the claim is made.^[18]

Smoothing Pool

The new Smoothing Pool is an opt-in feature that collectively pools the priority fees of every member opted into it. This is a way to effectively eliminate the randomness associated with block proposals on the Beacon Chain.^[18]

Protocol DAO (PDAO)

The Rocket Pool Protocol DAO is responsible for a host of settings across the protocol and is run by RPL governance. Protocol DAO can raise and support governance proposals, figure out how to spend the PDAO treasury, and potentially change certain protocol settings. For phase 0, the PDAO will have no direct on-chain power. This is to limit the governance power until it is stable enough to take control. The Core Team will affect this power at the behest of the PDAO.^[15]^[16]

Oracle DAO (ODAO)

The Rocket Pool protocol has two types of nodes, regular bonded nodes and oracle nodes. These node operators make up Oracle DAO. The Oracle DAO is a decentralized network of special nodes in the protocol that operates in a true on-chain DAO made just for Rocket Pool. Members in this DAO can create proposals to invite new members, leave the DAO, earn RPL from the protocol’s tokenomics, and much more. These nodes play a crucial role in relaying information from the beacon chain on ETH2 to Rocket Pool's smart contracts on ETH1.^[12]