DeFi
Rocket Pool debates tokenization solution amid staking competition – DL News
- Rocket Pool conducted an informal survey to gauge interest in making big changes to its governance token, RPL.
- Proponents believe the token is holding Rocket Pool back.
- The protocol has lost market share over the past year, due to the continued dominance of rival Lido.
Rocket Pool, the second-largest protocol in Ethereum’s $44 billion liquid staking sector, is considering a radical change to its design and governance token RPL amid growing pressure from rival Lido and a new class of competitors.
The change has garnered overwhelming support from members of the digital cooperative that runs Rocket Pool informally and online. survey.
These changes are aimed at addressing apparent demand for Rocket Pool’s $1.8 billion liquid staking token, rETH.
The token is supposed to trade at a value close to Ethereum, as each rETH token is backed by one Ether. But it has consistently traded at a high price, as Rocket Pool has been unable to attract enough “node operators” to meet the demand for rETH.
On Monday, Ethereum was trading at around $3,300. Rocket Pool’s rETH was trading at over $3,700.
At the same time, deposits on Rocket Pool have stagnated this year, hovering around 1.2 million Ether, worth about $4 billion at Monday’s prices.
Rocket Pool has stopped growing in terms of Ether deposits this year.
Lido, meanwhile, has extended its lead. Ether deposits at staking giant Liquid have increased by 4% since January 1.
And one new class Staking protocols built around Andreessen Horowitz-backed EigenLayer have emerged over the past year, quickly gobbling up more than 8% of the multibillion-dollar market, according to data collected by pseudonymous data analyst Hildobby.
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“They collectively lit a fire under our asses, as a community,” Valdorff, a longtime pseudonymous contributor, said in a presentation in March, in which he detailed proposed changes to the RPL.
Rocket Pool has long considered itself a From David to the Goliath of the Lido — the upstart trying to grab market share from a protocol that had monopolized liquid staking, the process of locking up one’s Ether to secure the network in exchange for a modest annual award.
Several years ago, Ethereum researcher Danny Ryan warned that most of the Ether could eventually end up in a single liquid staking protocol.
If this were to happen, the people who govern this protocol would have outsized influence over the blockchain, with the ability to confirm and order transactions as they see fit.
Given Lido’s dominant position in the liquid staking market, it was the one that bore the brunt of this fear. In addition, its node operators must meet certain criteria, limiting their number – there were only three dozen on Ethereum starting Monday — and, in theory, that makes collusion easier.
Rocket Pool’s “permissionless” design, on the other hand, means that anyone can become a node operator. As such, the protocol sports more than 3,000, making collusion extremely difficult.
But the Lido, eager to shed its reputation as a centralised, authoritative force, lobbied for its own cause. set of modifications promote decentralization.
However, Rocket Pool’s ability to meet user demand for rETH is limited by the number of node operators it can attract.
Rocket Pool has not seen a net gain of node operators in a single week since January 22, according to data on Dune.
This is partly because Rocket Pool requires node operators to acquire RPL.
The RPL is used as a bind — to be seized in the event of poor performance which risks users’ Ether — and as an incentive: as long as a node operator maintains sufficient bonding, at least 10% of the Ether they borrow from the protocol to run their node, they are also rewarded in RPL.
But many node operators didn’t see enough value in the token to maintain that connection. And some left the ecosystem altogether.
“What many thought was a good idea in 2017 didn’t quite pan out as planned, as the size of the protocol stagnated and even reversed,” Valdorff wrote in a statement. summary challenges facing Rocket Pool.
According to proposed overhaulRocket Pool would remove the requirement for node operators to post an RPL deposit. Those who still do, however, will still be able to vote on issues submitted to the DAO and will still be eligible for protocol rewards.
Of the 113 votes cast in the informal poll assessing the proposed changes, only two were opposed.
One skeptic said he had not seen any counterargument that could help him make an informed decision.
“The only information I have seen shows the benefits and biases of moving forward,” they said. wrote.
Solo staking advocate Yorick Downe dismissed that concern.
“You’ll probably never find an argument for doing nothing,” he said. wrote in response. “RocketPool is limited by the node operator and does not grow.”
Aleks Gilbert is DL News” DeFi correspondent based in New York. You can contact him at aleks@dlnews.com.