We're very happy to announce Rocket Pool 2.5 – Tokenised Staking Deposits, Continuous Staking, Extra Deposit Safety and updated RPL tokenomics. Many big improvements to decentralised staking in ETH2 coming soon. https://t.co/KwW6JBeMsY #ETH #staking
— Rocket Pool (@Rocket_Pool) May 29, 2020
The 2.5 platform upgrade introduces rETH, Rocket’s native interest-earning asset reminiscent of Compound cTokens, or Aave aTokens. In practice, users stake ETH via Rocket Pool and receive rETH in return. rETH is backed 1:1 by ETH and collects interest in real-time as node operators earn block rewards from validation on Ethereum’s upcoming Proof of Stake network.
“This token does not need to be locked within the network to gain rewards and it can be traded, sold, or held as the user desires, all from the moment they deposit ETH for staking. This token can instantly be used in DeFi apps and allows DEXs and wallets the ability to offer instant staking services.”
What’s neat about rETH is that stakers can now confidently lock ETH during Phase 0 and 1 of ETH2, knowing that they’ll receive a liquid asset in return. This is very important as the existing framework for Serenity requires users to bond their ETH for the first phases which are likely to take upwards of months – a unique risk that may scare off those eager to stake.
What Else is New?
Outside of rETH, Rocket Pool 2.5 introduces a number of improvements such as:
- Decreasing the minimum staking amount to 0.01 ETH
- Lifted its maximum staking cap.
- Removing staking durations to eliminate mandatory vesting
- Socialized slashing – If a node fails, all holders lose a tiny amount of value, rather than one unlucky person losing everything.
- Node operator tokens – nETH – for Phase 0 and 1
- RPL tokenomic reworks
For those keeping up with Rocket Pool, the old model required node operators to stake RPL to validate on the network. Now, RPL is not required, but rather staked as a security signal to prioritize node uptime and safety. Those who stake RPL stand to earn a commission directly from RocketPool in the form of a pro-rata claim on the 2% protocol fee incurred on all rewards earned from staking.
This new model ties into the democratized model of DeFi perfectly, with rewards being distributed directly to those providing the infrastructure to validate and aggregate ETH rewards for the platform at large.
ETH2 Is Coming
While there is no definitive date in place for the launch of Phase 0, we’ve seen a number of signals that it may very well happen by the end of 2020. Highlighting progress like the Psymatic Labs Topaz testnet, we’ve now seeing ETH2 clients interface directly with one another on testnet, a signal that mainnet is getting closer by the day.
For nontechnical users, staking ETH can seem like a daunting task. With expectations of anywhere from 4-20% APR, we expect a suite of centralized providers like Binance and Coinbase to offer easy onramps to staking. The promise of RocketPool is being able to stake in a distributed fashion – directly in line with the decentralized ethos we frequently touch on here at DeFi Rate.
If one thing is for sure, those who participate in Phase 0 and 1 are sure to see the highest returns on staked ETH, and we expect this launch to kick off a flurry of hype for the wider Etheruem ecosystem. To this end, we recommend getting your plans in order for how you will stake (either independently, through a pool or an exchange) and keeping up to speed on when it’s time to put your ETH to work.
Cooper is the Editor of DeFi Rate and an active contributor to leading DeFi media outlets like The Defiant, DeFi Pulse, and Bankless. He works with early-stage teams through Fire Eyes DAO to incubate governance models and grassroots community development. He is an ambassador to Set Protocol and an author of a weekly publication called Token Tuesdays. To stay up with Cooper, follow him on Twitter.