What is Rocket Pool (RPL)?
Rocket Pool is a decentralised Ethereum staking solution designed to provide users with an accessible and secure way to stake their Ether (ETH) and earn rewards without the need for substantial technical expertise or large amounts of capital. In this article, we will explore the concept of Rocket Pool, its core features, and how it contributes to the overall Ethereum ecosystem.
What is Ethereum 2.0 and Staking?
Ethereum 2.0, also known as Eth2 or Serenity, is an ambitious upgrade to the Ethereum blockchain that aims to increase scalability, security, and sustainability. One of the key components of Ethereum 2.0 is the transition from a Proof of Work (PoW) consensus mechanism to a Proof of Stake (PoS) model. In the PoS model, validators are chosen to propose and validate new blocks based on the amount of cryptocurrency they hold and are willing to "stake" as collateral.
Staking offers an opportunity for Ether holders to earn rewards by participating in the network's validation process. However, staking on Ethereum 2.0 requires a minimum of 32 ETH, which may be inaccessible to many users. Additionally, staking involves running a validator node, which can be technically challenging for some users.
What is Rocket Pool?
Rocket Pool is a decentralised staking protocol built on Ethereum that aims to make Ethereum 2.0 staking more accessible and inclusive. The platform allows users to pool their Ether together to meet the 32 ETH minimum requirement and share the rewards proportionally. Rocket Pool simplifies the staking process by eliminating the need for users to run their own validator nodes while ensuring a high level of security and decentralisation.
Key Features of Rocket Pool
- Decentralised Infrastructure: Rocket Pool is designed to be a non-custodial and decentralised solution. Users maintain full control over their staked Ether, and the platform relies on a network of node operators to provide validation services. A new upgrade makes the protocol compatible with Ethereum’s Shanghai upgrade allowing validators to initiate withdrawals of their staked ETH on the Beacon Chain. The upgrade introduces many new improvements and changes aimed at scaling Rocket Pool.
- Low Minimum Staking Requirement: Rocket Pool allows users to stake any amount of Ether, breaking the barrier imposed by the 32 ETH minimum requirement for staking on Ethereum 2.0 directly.
- Incentivised Node Operators: Rocket Pool's node operators are incentivised to maintain the highest levels of performance and security through rewards and penalties, ensuring that the network remains robust and reliable.
- rETH Token: When users stake their Ether in Rocket Pool, they receive rETH tokens in return. rETH represents a user's share of the staked Ether and any rewards earned. rETH tokens can be traded, sold, or used in various decentralised finance (DeFi) applications.
- Compatibility with Ethereum 2.0: Rocket Pool is designed to be compatible with Ethereum 2.0, ensuring a seamless transition and allowing users to stake their Ether and earn rewards as Ethereum transitions to its PoS model.
How Does Rocket Pool Work?
Users deposit their Ether into Rocket Pool's smart contracts.
The platform pools the deposited Ether until it reaches the 32 ETH minimum required to create a new validator node.
The Atlas Upgrade
This upgrade will be Rocket Pool’s biggest to date and will be primarily aimed at scaling the protocol to meet much higher demand, now and into the future, while fully maintaining the commitment to decentralisation and the health of Ethereum.
Atlas introduces the LEB8 mini-pools which reduce the minimum ETH amount required by node operators to create a mini-pool from 16 ETH to 8 ETH, without compromising the security incentives already in place.
This will instantly allow the protocol to 3x its capacity and adapt to already very high demand for its LSD rETH much better.