Proposal: rETH - RocketPool

(this is a proposal from another DAO [09.01.2022], that probably they don’t go ahead with this, and I’ve updated)

Rocket Pool is a decentralised Ethereum staking protocol. Stake as little as 0.01 ETH and receive a tokenised staking staking deposit rETH. Run your own node with 16 ETH

Reasons why rETH (Rocket Pool) is best in class, and the pristine ETH derivative that will (eventually) take over the ETH ecosystem as a derivative asset to be built on top of:

  • Purely decentralized, open source, trustless, permissionless, etc. Rocket Pool aligns well with the Ethereum ethos. This is kinda the whole point.

  • rETH simply increases in value instead of rebasing, so income is generated as capital gains rather than income. More tax-efficient => higher post-tax yield.

  • Because of the lack of rebasing, it is more L2-compatible. AFAIK stETH hasn’t yet figured this part out.

  • Staking will be a big deal post-merge, with an estimated yield of 13.9% (up from current 5.2%) according to Justin Drake (https://uk.linkedin.com/in/drakefjustin?original_referer=https%3A%2F%2Fwww.google.com%2F)

  • Low(est?) fees. Currently 8.92% (vs. 10% for stETH, 15% for Kraken, 25% for Coinbase). This will float based on demand.

  • Due to its thrustless design and composability, rETH is the most likely to be adopted by DeFi as a building block for collateral and lending.

  • MEV (Maximal extractable value) will be captured and fairly accrued to rETH holders. This will likely not be the case for CEX staking, for example.

  • For those optimizing yield on their ETH, being able to stack staking yield + DeFI lending yield will offer the best overall return.

  • Fully redeemable for ETH prior to the merge, provided there’s enough incoming ETH liquidity.

  • Rocket Pool encourages non-majority clients, increasing the health of the beacon chain.

  • Depositors are effectively fully insured from any type of incident, due to the RPL bond that each node operator must put up. rETH is insured by over 100% of its value. In the case that there is a slashing on the Rocket pool network. The penalty will come from the node operator and not rETH holders. There is no other ETH staking derivative that has this kind of insurance or will ever come close to it.

We all know there are many different DEFI yield farming strategies and I believe that there will be many strategies for rETH. Since rETH should never be less in value against ETH and it’s coming from the Rocket Pool protocol, which follows the Ethereum ethos, I think that it’ll be accepted as collateral for many of the lending dapps on Ethereum. When this does happen rETH holders will be able to collateralize their rETH for ETH to deposit back on Rocket Pool. This will create a positive feedback loop where the first rETH holders to implement this strategy will yield probably around 20-40% on their ETH instead of the average 5-8% just from staking rewards.

Of course, there will be many more advanced yield farming strategies. This is just an example of a simple one that could be profitable for rETH holders as well as the protocol that accepts rETH as collateral.

Currently there is 35,000? rETH (I don’t know) in circulation and growing with no platform to borrow against. There is high demand for rETH in DEFI and the community is looking for somewhere to use their rETH. If OOKI were to allow rETH as collateral and for trading it would be the first protocol to do so and give massive amounts of publicity for OOKI and attract a lot of collateral.

1- Official website: https://rocketpool.net/
2- Eth2 Liquid Staking @eliasimos analytics: Dune

January 10th - ETH staked on RocketPool: 74,464 ETH (showed on its website)

Today - ETH staked on RocketPool: 194,304 ETH (shows on its website)


Rocketpool 194,176 eth - 4.3% of MarketShare (and rising)

Liquidity doesn’t look bad (except in SushiSwap)

1 Like

Great post. RPL is on the way to achieving something great.

Chainlink does not have an RPL price feed.

API3 can get a feed. >:)

We have actually developed for stETH integration into the protocol as collateral for borrowing. The rebasing is already solved by stETH with wstETH and stETH has more liquidity and a feed already supported by Chainlink. rETH can potentially be added as well but wstETH is already a planned integration. Both are viable options and there is potentially a benefit to supporting both as it taps a bigger market.

I think we should do it and enganche the RocketPool community in the process, they have an awesome community. This could be a great partnership, mutually beneficial for both parties

I am pretty familiar with the technical structure of RocketPool and feel it is sufficiently well designed. It is well structured and has pretty strong usage as well as a good community. I am personally in support of it as collateral for borrowing but the main issue is a price feed. It is ideal that this is supported on Ethereum because it is the most liquid on Ethereum, but there seems to not be a feed for it supported by Chainlink. This hinders the adoption capabilities of the asset, unfortunately.

Could it be another path to get this feed? We should get Chainlink feed, no doubt. But could this be compatible with another one?
Maybe, if this can be a possibility, work tigh with RP and Chainlink to provide feed through Chainlink.
Also bringing RP community to Ooki is a good idea, they are a more experienced community which could bring new ideas. Both, Ooki and RP, are purely decentralised
Bring other communities to Ooki could became Ooki in a meeting point for them, I mean, we are implementing different projects that improve their project too, allowing lend&borrow&trade their coins