RocketPool

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Discover RocketPool's fundamentals and latest news.

This content was generated by Whalee (BETA), an AI crypto assitant that analyses cryptocurrencies. Informations can be incomplete and/or erroneous. Please always double check and DYOR.

What is RocketPool?

Rocket Pool (RPL) is a decentralized Ethereum staking protocol designed to make Ethereum staking accessible to a wider range of users. It allows users to stake as little as 0.01 ETH, reducing the traditional 32 ETH threshold. The protocol operates on a decentralized network of node operators, enhancing security and decentralization. Users receive rETH, a liquid token representing their staked ETH and rewards. Node operators need only 8 ETH to stake and earn extra rewards, including commissions and RPL tokens for their services.

How is RocketPool used?

Rocket Pool (RPL) is a decentralized Ethereum 2.0 proof-of-stake protocol that utilizes two tokens: RPL and rETH. Here's how RPL is used:

  • Governance: RPL is the primary protocol token used for governance within the Rocket Pool network. It allows holders to participate in decision-making processes and shape the future of the protocol.
  • Insurance Collateral: Node operators must stake a minimum of 10% of the ETH value in RPL as collateral. This collateral serves as insurance, ensuring that node operators are incentivized to maintain the integrity of the network. If a node operator is penalized or slashed, their RPL collateral is auctioned to compensate for any losses.
  • Inflation Rewards: RPL inflation is used to incentivize key players, including node operators and oracle DAO members. The inflation rate is initially set at 5% per annum and is distributed among these groups to encourage their participation and support the protocol's development.
  • Node Operator Incentives: Node operators receive RPL rewards for staking RPL as collateral. The more RPL staked, the more rewards they receive. This incentivizes node operators to maintain a high level of insurance collateral, enhancing the overall security of the network.

Overall, RPL plays a crucial role in maintaining the decentralization, security, and governance of the Rocket Pool protocol.

How do I store RocketPool?

Rocket Pool (RPL) tokens can be stored in various wallets for added security and convenience. Here are the steps to store RPL tokens:

  1. Popular Wallets: RPL tokens can be stored in popular wallets such as MetaMask and Trust Wallet. These wallets provide a user-friendly interface and are widely supported.

  2. Hardware Wallets: For added security, you can store RPL tokens in hardware wallets like Ledger and Trezor. These wallets offer offline storage and are highly secure.

  3. MetaMask: To add RPL tokens to MetaMask, follow these steps:

  • Open MetaMask and click on the "Assets" tab.
  • Click "Add Token" and enter the RPL token contract address (0xD33526068D116c).
  • Confirm the addition of the token to your MetaMask wallet.

By using these wallets, you can securely store and manage your RPL tokens.

How to buy RocketPool?

To buy Rocket Pool (RPL) tokens, follow these steps:

  1. Create an Account:

    • Open an account on a cryptocurrency exchange that supports RPL, such as Binance, KuCoin, or BitScreener.
    • Verify your identification to ensure secure transactions.
  2. Choose a Funding Method:

    • Select a payment method, which may include:
      • Credit or debit card.
      • Bank deposit.
      • Third-party payment channels.
      • P2P trading (available on some exchanges).
  3. Buy Rocket Pool (RPL):

  • Navigate to the "Buy Crypto" or "Buy & Sell" section on the exchange platform.
  • Choose RPL as the cryptocurrency you want to buy.
  • Select your preferred order type, such as market order, stop order, limit order, or others.
  1. Transfer RPL to Your Wallet:
    • Once purchased, you can store RPL in your exchange account or transfer it to a personal cryptocurrency wallet, such as MetaMask, for additional security and flexibility.

Remember to research the exchange, read user reviews, and compare fees before making a purchase.

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History of RocketPool

Rocket Pool (RPL) was established in late 2016 by David Rugendyke, a senior developer with over 18 years of commercial experience and a computer science background. The project began with an alpha version released in May 2017, which attracted a vibrant community and led to the expansion of the team. Over the next few years, Rocket Pool ran five public betas, with over 100,000 ETH staked and hundreds of users participating, before its official launch on Ethereum mainnet in November 2021.

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How RocketPool works

Rocket Pool (RPL) is a decentralized liquid staking protocol designed to make staking on the Ethereum 2.0 network more accessible and rewarding. Here's a detailed overview of how it works:

Staking and Minipools

Rocket Pool allows users to stake as little as 0.01 ETH to participate in the network. This staked ETH is combined with deposits from other users to create a minipool, which is a smart contract that represents a single validator on the Ethereum 2.0 Beacon Chain. Each minipool requires a total of 32 ETH, which can be split between the node operator (8 or 16 ETH) and the staking pool (24 or 16 ETH respectively).

Node Operators and Rewards

Node operators are responsible for running the nodes that validate transactions on the Ethereum 2.0 network. They earn rewards in the form of ETH, priority fees, and MEV (Maximum Extractable Value) rewards. These rewards are distributed to the node operator and the stakers who contributed to the minipool.

rETH Token

When users stake ETH on Rocket Pool, they receive rETH tokens in return. The rETH token represents both the amount of ETH staked and the rewards earned. The value of rETH is determined by the ratio of total rETH supply to the total ETH staked, plus the total rETH contract balance and the share of priority fees.

Staking Methods

There are three ways to stake ETH on Rocket Pool:

  1. Direct Staking: Users can stake ETH directly on the Rocket Pool website.
  2. Decentralized Exchange (Layer 1): Users can purchase rETH using a decentralized exchange like Balancer or Uniswap.
  3. Decentralized Exchange (Layer 2): Users can stake ETH on a Layer 2 network like Optimism or Arbitrum, which offers lower transaction fees.
Watchtower Nodes

Rocket Pool also has watchtower nodes, which are responsible for reporting the Beacon Chain's state back to the Ethereum PoW network. These nodes help update the rETH/ETH exchange rate and report when validators are ready to withdraw their assets.

RPL Token and Governance

The RPL token is the governance token of Rocket Pool, used for voting on protocol decisions. Node operators must stake at least 10% of their ETH's value in RPL as collateral to ensure their node's performance and behavior. RPL is also distributed as a reward to node operators for operating on the network.

Security and Insurance

If a node operator's poor performance or misbehavior causes the network to lose ETH, the RPL collateral can be sold to recoup the losses. This ensures that the network remains secure and incentivizes node operators to maintain good performance.

Overall, Rocket Pool provides a decentralized and liquid staking solution for Ethereum 2.0, making it more accessible and rewarding for users.

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RocketPool's strengths

Rocket Pool (RPL) has several strengths that contribute to its decentralized Ethereum staking pool and promote decentralization:

  • Support for Small-Scale ETH Stakers: Rocket Pool is designed to support small-scale ETH stakers, making it more accessible and inclusive for a broader range of users.
  • Decentralization: By allowing node operators to stake with lower amounts of ETH (8 or 16 ETH) compared to solo staking (32 ETH), Rocket Pool promotes decentralization by increasing the number of participants in the network.
  • Easy Staking: The Smart Node Stack makes staking very easy for node operators, reducing technical barriers to entry.
  • Additional Rewards: Node operators earn extra rewards by charging Rocket Pool users a commission of 14% of the rewards earned on their node by their ETH, and they also earn RPL rewards for providing insurance collateral.
  • Flexibility: Node operators have control over their own nodes and can come and go from the network as they please.

These strengths make Rocket Pool an attractive option for those who want to participate in Ethereum staking without needing significant technical expertise or large amounts of ETH.

RocketPool's risks

Rocket Pool (RPL) faces several risks that are inherent to its decentralized Ethereum staking protocol. Here are some of the key risks associated with RPL:

Untrustworthy Oracles

Rocket Pool relies on a group of 20 Oracle Nodes that manage data synchronization between the ETH1 and ETH2 blockchains and decide when validators have staked enough RPL. If 11 of these nodes were to conspire, they could potentially manipulate the system, although this would likely undermine Rocket Pool and make their staked RPL worthless.

rETH Liquidity Crisis

Rocket Pool issues rETH tokens to users who stake ETH. The value of rETH is pegged to ETH, but if people stop staking more ETH, there could be a liquidity crisis, making it difficult for users to "cash out" their rETH. This is a concern, especially if alternative staking solutions become more attractive.

Smart Contract Risks

Rocket Pool, like any protocol using smart contracts, is vulnerable to bugs that could lead to breaches or exploitation. While the protocol has open-source code and has undergone audits, this is not foolproof. Rocket Pool has a bug bounty program to mitigate these risks.

Risk of 51% Attacks

Rocket Pool's approach allows users to run a node at a lower cost than Ethereum's native staking cost. This could enable malicious actors to launch a 51% attack on the network, forcing users to bear most of the costs.

Long-term RPL Tokenomics

Rocket Pool's insurance system relies on node operators earning money on their insurance. However, this system may not be sustainable in the long term. As the growth phase ends and the number of minipools stabilizes, the demand for RPL may decrease, causing its value to depreciate. This could lead to node operators reducing their collateral, further increasing the supply of RPL and reducing its value.

Inflation Rate

Rocket Pool has a 5% annual inflation rate, which could lead to an increase in the supply of RPL over time. This inflation rate could impact the value of RPL if not managed effectively.

These risks highlight the complexities and potential vulnerabilities of Rocket Pool's decentralized staking protocol.

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RocketPool’s team

  • Team Background: The team behind Rocket Pool has been in the staking space since 2016 and is considered very legitimate. They have previous experience in the industry and have been involved in notable projects and collaborations, such as working with Flashbots to share MEV (Maximum Extractable Value) rewards.

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