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An article discussing how Lido can be progressively decentralized?
Before the upgrade in Shanghai, ECN had the honor to invite representatives of three important liquid staking service providers, StakeWise, Rocket Pool and Lido, to be guests on the ECN Podcast, and chat with them about the impact of the upgrade of Ethereum Shanghai on Staking users and the entire industry structure, as well as the What innovations and changes are expected to be brought to Ethereum Staking by the upcoming large-scale upgrades of the three protocols.
Stephanie
This is the second episode of the Shanghai Upgrading and Staking podcast series, and it is a pleasure to invite Darren Langerly, the general manager of Rocket Pool. Rocket Pool is currently the only decentralized liquidity staking protocol. Darren introduced Rocket Pool's unique innovations in protocol, token model and governance since its launch, and shared how to achieve a balance between protocol development and Ethereum decentralization. A balanced view, the profound impact of the Shanghai upgrade on the staking industry and the prediction of the trend of the staking industry, and how Rocket Pool's Atlas upgrade will greatly improve the scalability of the protocol and benefit individual node operators.
【Anchor of this issue】
[time stamp]
01:09 Introduction to Rocket Pool
03:07 Redstone Upgrade Review
04:30 Redstone's smooth pool
07:35 Rocket Pool's non-back-to-base token model
10:33 Coinbase Venture joins Oracle DAO
12:19 The role of Protocol DAO and Oracle DAO in governance
15:55 What metrics should be used to evaluate the success of a decentralized liquidity staking protocol
20:50 Shanghai upgrade has two important impacts on Staking
25: 44 The staking industry is still very early and still needs a lot of education
28:49 How to think about institutional staking
31:43 Shanghai upgrade will be a turning point for rETH to counterattack stETH
35: 28 How will the Staking industry structure develop
36: 44 What are the exciting changes brought about by the Atlas upgrade
39: 47 8 ETH mortgage mini pool how to make less pledge but earn more commissions
42: 25 Why staking 8 ETH in a mini pool is still safe
44: 10 Is the mini pool with 4 ETH mortgaged far away?
https://ecnpodcast.fireside.fm/shanghai-upgrade-with-rocket-pool
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https://www.xiaoyuzhoufm.com/episode/643 fa 95 cf 03532 ff 26 a 149 e 8
We have also updated in the small universe!
first level title
Rocket Pool is a decentralized liquidity staking protocol, and people can participate in Rocket Pool staking in two ways. The easiest way now is to exchange ETH for rETH, which will accumulate rewards over time. When you want to exit the pledge, you only need to exchange rETH for ETH, and you will get more ETH than the original. The other is node operation, that is, the ETH deposited by the liquidity staker needs to be matched with a node operator who needs to pledge. When the mini pool has 32 ETH, the node operator will represent other liquidity A staker becomes a validator for the Ethereum network along with his own ETH. Node runners earn a commission on block rewards.
The special thing about Rocket Pool is that you can be a node runner in the protocol. In many other protocols, node running is done through a group of selected node runners, but in Rocket Pool, being a node runner is permissionless .
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➤ Redstone Upgrade Review for Rocket Pool
The previous exchange of rETH also had this delay, that is, it could not be operated within 24 hours of the exchange to rETH, which actually affected the integration. In the Redstone update, we removed this delay. Since then, the integration of reth has taken off.
Smoothing pool (smoothing pool) is also an important feature in the Redstone upgrade. Redstone is actually an upgraded version adapted to Ethereum mergers. After the merger, node runners actually start earning transaction fees and MEV. Since transaction fees and MEV vary greatly, it depends on the luck of the verifier. So what the smooth pool does is, if a node runner chooses to use the smooth pool, then all their blocks, especially proposed blocks, go into the smooth pool, which removes this variability and everyone gets equal award. This feature is very popular among node runners, it is estimated that 75% of the mini-pools join the smooth pool.
Rocket Pool's Liquid Collateral Token Model
Rocket Pool uses non-rebasing tokens. This needs to start with back-to-base tokens, which are anchored with ETH 1: 1. As the rewards obtained increase, the number of tokens will increase. So every day your balance or number of tokens will increase. Back-to-base tokens have disadvantages, which is why we use non-back-to-base tokens. Non-back-to-base tokens are tokens whose value relative to ETH will increase over time, but the quantity remains the same. The benefits of this model are, on the one hand, it is easier to integrate with DeFi compared to back-to-base tokens because it is a standard ERC 20 token; on the other hand, from a tax point of view, it depends on where you are. In jurisdictions where back-to-base tokens increase in number of tokens every day, that means taxes are paid every day, which is not ideal. And a non-back-to-basic token like reth means you only have to pay the tax twice, converting ETH to rETH and rETH to ETH.
secondary title
Governance of Rocket Pool
How to understand Coinbase Venture joining oDAO?
First of all, we should look at Coinbase and Coinbase Venture separately, and it is Coinbase Venture that joined oDAO. For Coinbase, they want decentralized technology to be viable, so they invest in decentralized technology, which has a great positive effect on attracting more people into the crypto world. From the perspective of venture capital, it is reasonable for them to hold some of our tokens, because investing in decentralized protocols is also investing in their brand.
What do pDAO and oDAO do? Why do so many industry celebrities join oDAO?
The governance of Rocket Pool actually has two DAOs, one is Protocol DAO (pDAO) and the other is Oracle DAO (oDAO). The members of pDAO are our node runners. Node runners stake our protocol’s native token, RPL, as collateral to protect rETH holders, and to earn new RPL as a reward. But RPL itself is not a governance token, only when it is pledged into the agreement. In other words, if you are a node operator, when you provide value to the protocol, you will also gain governance weight in pDAO. pDAO actually leads the development of Rocket Pool. Basically everything we do, including parameter modification and upgrade, has to go through pDAO.
Right now pDAO is working fine, but we don't think on-chain governance is robust enough to be fully fledged governance, so oDAO exists for several reasons. First of all, we actually need information from the beacon chain, that is, from the consensus layer to the execution layer, because Ethereum is actually running two chains now. Therefore, we need some trusted party who can provide this information. So oDAO is composed of these very famous people and organizations in Ethereum, such as etherscan, beaconcha.in, Lighthouse, Nimbus, Bankless, Anthony Sassono, and recently joined Coinbase and Gitcoin, and now oDAO has about 16 or 17 people. They give us information and apply for an upgrade. After oDAO makes a decision, pDAO will vote whether to join the agreement.
If Rocket Pool imposes self-imposed limits on network share, how should we evaluate the success of the decentralized liquidity staking protocol, and what indicators should we value?
The reason why we value the number of individual node operators is that in the end, Ethereum is going to be decentralized. On the one hand, it is to improve the resilience of Ethereum, and on the other hand, it is to ensure its credible neutrality.
Therefore, institutions, organizations and even individuals on Ethereum should think about this issue, which is a risk management issue. When you look at the liquidity staking market today, the best case scenario is that multiple liquidity staking agreements have an even share of the market, but that's unlikely to happen. When one party has a high market share, it actually puts Ethereum at risk. This is the rationale for not putting all your eggs in one basket, and you also want to reduce the risk of centralization to Ethereum.
first level title
The Impact of Shanghai Upgrade on Staking
The Shanghai upgrade is important because it fills in the final piece of the Ethereum proof-of-stake puzzle, as it enables node runners to withdraw funds, for those who were previously hesitant due to not knowing when they could withdraw or compliance issues Will be more confident to participate in the pledge. Another point is that you cannot take out a deposit to choose other pledge service providers before Shanghai upgrades. The reason why it is important to close the staking business like Kraken is because once the Shanghai upgrade is activated, you can choose the service provider you want, and now there are many more choices than before. So it will be interesting to see how that plays out, how people reallocate their staked funds to do better risk management. Therefore, on the one hand, the overall staking inflow will definitely increase, and on the other hand, the distribution of different protocols will also definitely increase. In the short term, there may be a little selling pressure from node runners taking out rewards, but from every survey we've seen, the majority of node runners intend to continue staking. They just sell a small amount to pay taxes or some other purpose. But they also put a lot of rewards back into the liquidity staking protocol or re-stake into node operators.
➤ Beacon Chain has been online for more than a year. With the diversification of pledge services, do users gradually mature and know how to choose a pledge service provider that suits them?
As I said before, the biggest change brought about by the Shanghai upgrade is actually the population distribution. People who were unable to stake due to compliance reasons can now do so after the Shanghai upgrade. Another point is that the staking industry is maturing, but still very early days. We expect many newcomers from different regions to join staking.
We're just bridging the early adopters right now, as more new people come in, we'll have new challenges, and we still have a lot of education to do.
➤ How do you view institutional pledges?
It depends on where institutions choose to put their ETH. It makes sense if they adopt a risk management strategy and put ETH on a lot of different protocols. If they prioritize decentralized protocols, then our market share will grow without the negative impact of centralized providers. Rocket Pool is currently the only liquid staking service provider that can run nodes. Organizations can earn more if they choose Rocket Pool for staking, because there are commissions in addition to staking rewards.
➤ Will the Shanghai upgrade be a turning point for rETH to counterattack stETH?
The Shanghai upgrade is a catalyst, along with our Altas version upgrade. Right now, our node runners need 16 ETH per validator they start, plus 1.6 ETH worth of RPL. After the Altas upgrade, they actually only need 8 ETH and RPL worth 2.4 ETH. We actually lowered the barrier to entry for node runners. We also allow the current 16 ETH mini-pool to migrate to an 8 ETH mini-pool, which will provide a big boost in node runner supply. There's not a lot of comparison with Lido in this regard, because in terms of scalability, no matter how much ETH you send them, they can expand to accommodate, because they don't need to worry about decentralized or permissionless validator sets. And our node operators need to have collateral as a protection for rETH holders when launching the mini pool. We think you have to mortgage something to be called a proof of equity.
We feel like 8 ETH will still provide adequate protection for our rETH holders and allow us to scale quickly. In fact, it could triple the capacity of what we have today.
➤ How do you expect the Staking industry structure to develop? Does the winner-take-all rule still work?
I think especially institutions or other large ETH stakers will determine the share distribution of the future Staking market. It's still very early days for staking, and players in this industry are just starting to get their Lindy effect, which is at least convincing people to believe in them. More and more protocols are proving themselves, i.e. they offer more alternatives, and I would love to see a redistribution of shares among individual protocols.
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Rocket Pool's Atlas Upgrade
First, the Atlas upgrade supports withdrawals, so Rocket Pool node runners can withdraw from staking and withdraw.
Second, they can also migrate to a mini pool of 8 ETH, which is very exciting. And new node runners can also start a mini pool of 8 ETH.
Also, for individual stakers, you don’t need to exit the beacon chain, you can migrate your 32 ETH verifiers to Rocket Pool and turn it into four 8 ETH mini pools, and you can also earn to the commission on the Rocket Pool protocol.
➤ Is it safe to stake 8 ETH mini-pool? Why do you earn more commissions with less collateral?
Safety and earning more commissions are two issues.
First of all, going from 16 ETH to 8 ETH is actually collecting more commissions from more stakers. In the 16 ETH mini pool you might have a 15% commission, which means you collect 15% commission from the other 16 ETH stakers. Now from 16 ETH to 8 ETH, you actually collect the current 14% from the other 24 ETH pledgers, the ratio is reduced, but it becomes 14% of 24 ETH, and the commission has actually increased a lot. rETH stakers pay the average commission across all node runners, and rETH stakers pay less when node runners move from 16 ETH mini-pools to 8 ETH mini-pools. So on the one hand, node operators earn more, while rETH stakers pay less, which is actually a win-win situation.
Regarding the security of the 8 ETH mini pool, according to our analysis, the mortgage of 8 ETH is a very safe amount. In addition to 8 ETH, there is also 2.4 ETH worth of RPL as collateral, so node operators need to mortgage 10.4 ETH, all of which are sufficient to protect the funds of rETH pledgers when Ethereum is in the most severe crisis. Even if there are black swan events such as quadratic gold leakage, one-third of the node runners going offline, and the inability of Ethereum to finalize, it will take many days to consume all the mortgages of Rocket Pool because Ethereum cannot be finalized.
That said, the 8 ETH mini-pool model provides adequate protection when considering these unlikely black swan events.
➤ Is the 4 ETH mini pool far away?
The 4 ETH mini pool is indeed one of our goals, but from 8 ETH to 4 ETH we must have additional security protection. Regarding the priority of this goal, we need to discuss with the community, and the research and development of the security protection required for 4 ETH is our future work.
reference materials
➤ Rocket Pool Official Twitter: https://twitter.com/Rocket_Pool
➤ Darren's personal tweet: https://twitter.com/langerstwit
➤ Rocket Pool official website: https://rocketpool.net/
➤ Atlas upgrade introduction: https://medium.com/rocket-pool/rocket-pool-atlas-upgrade-7 c 69 e 39 a 3 d5 f
➤ Redstone upgrade introduction: https://medium.com/rocket-pool/rocket-pool-the-merge-redstone-601 d 9 efd 6 b 4
