RPL: the beating heart of Rocket Pool's decentralized ETH liquid staking protocol. This multi-functional utility token is the ultimate wingman of the ecosystem, providing rewards, insurance, and governance all in one.
Rocket Pool is a DeFi staking protocol for Ethereum that allows any individual or organization with at least 16 ETH to join the network nodes. However, to ensure security, each node must provide a deposit in the form of RPL. In return, node operators receive RPL rewards for maintaining the staking pool.
RPL tokenomics
At the time of writing, Rocket Pool's maximum token supply is limited to just over 19 million tokens, which are already circulating on the market. RPL's market cap stands at $797 million, ranking it at #63 on CoinMarketCap. The asset's current price fluctuates around $40-45.
Rocket Pool (RPL) takes a different approach than most decentralized finance platforms when it comes to inflation. Instead of fighting inflation with token buybacks or burning, RPL developers aim for an inflation rate of 5% per year to be able to reward protocol users and fund the decentralized ecosystem. This is in contrast to the common practice of keeping inflation low to maintain token value.
New tokens are distributed among participants as follows:
70% is allocated to node operators;
15% — to Oracle DAO companies;
15% — to DAO Treasury organizations.
Rocket Pool relies on two decentralized autonomous organizations (DAOs) for its management. Oracle DAO handles the nodes responsible for transmitting data from oracles to the project’s protocol, and is responsible for configuring smart contracts on the Ethereum blockchain and its auxiliary Beacon Chain network. Companies participating in Rocket Pool staking through Oracle DAO include Lighthouse, Nimbus, Prysm, Blockchain Capital, Bankless, and others.
The DAO Treasury is in charge of the Rocket Pool project's financial development. It oversees the RPL inflation mechanism, rewards distribution, staking settings, fee and deposit configurations, and more. In a nutshell, it manages all financial operations within the Rocket Pool ecosystem, ensuring everything runs smoothly and efficiently.
Rocket Pool ecosystem scheme. Source: the protocol's CEO's blog on Medium.
Rocket Pool masterminds
David Rugendyke, a developer with 18 years of experience, is the founder and CTO of the staking protocol. The idea for Rocket Pool came to him in 2016, and by 2018, RPL was already in circulation.
The position of CEO is held by Darren Langley, who has extensive experience as a developer and software architect in the digital asset, financial, and blockchain industries.
ETH staking protocol: cogs in the machine
Rocket Pool offers users two ways to join their staking protocol. The first option is more suitable for companies, as it involves setting up their own computer node. Users must deposit a minimum of 10% RPL of the staking amount and 16 ETH in order to launch a node. Such participants receive a higher return on their investments (approximately 7% annualized), earn fees from staking when regular users join their staking pool, and receive RPL bonuses.
Another option for users looking to join Rocket Pool is to connect to an existing node, which represents a separate staking pool. To do this, users only need to deposit a minimum of 0.01 ETH and receive a liquid staking token called RETH in return. RETH's average annual percentage yield is around 4.29% APR. This option is more suitable for individual users who want to participate in staking but do not have the necessary resources to set up their own node.
RETH is a derivative token of ETH in the Rocket Pool protocol. It allows users to stake even small amounts of ETH, making it more accessible for everyone. The rewards are paid out in RETH and depend on the size of the deposit and the overall performance of all nodes. RETH's price is secured by collateral funds.
The protocol utilizes open-source smart contracts audited by Sigma Prime, Consensys Diligence, and Trail of Bits in 2021 and 2022. Smart contracts enable token placement in the staking pool without direct storage and establish decentralization conditions.
In order to minimize losses caused by malicious nodes, the protocol distributes them among all ecosystem participants.
With its innovative approach to staking and its utility token RPL, Rocket Pool has become an attractive option not only for individual users but also for other staking providers looking to increase their passive income.
