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30 November 2020

DeFi Project Spotlight: Rocket Pool, Staking Service for Ethereum 2.0 | Crypto Briefing

DeFi Project Spotlight: Rocket Pool, Staking Service for Ethereum 2.0 | Crypto Briefing


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DeFi Project Spotlight: Rocket Pool, Staking Service for Ethereum 2.0.

Rocket Poolhelps make staking on Ethereum 2.0 more accessible, convenient, and decentralized.

The advantages of using Rocket Pool instead of staking natively are different for node operators and stakers.

Node operators with 16 ETH get the opportunity to stake, while whales can spin up two times as many nodes as they could natively and enjoy a better return on their investments.

Rocket Pool splits the pooled funds in chunks of 16 ETH and distributes them across node operators.

Rocket Pool reduces potential losses because if a platform’s node is slashed, the entire pool of stakers shares the loss.

To better protect stakers, Rocket Pool provides additional incentives for node operators, which stake the protocol’s nativeRPLtokens.

By allowing smaller players with limited resources to join Ethereum 2.0 consensus, Rocket Pool democratizes participation in the network and makes it more secure. .

Rocket Pool’s smart contracts receive funds from users and distribute them across the network of Smart Nodes, which are essentially nodes connected to the platform.

Once a Smart Node gets a total of 16 ETH from Rocket Pool, the platform’s smart contracts automatically batch the node’s 16 ETH with the pool’s 16 ETH and creates a 32 ETH validator. .

On top of staking rewards, node operators in Rocket Pool receive commissions from users.

If there is more ETH than Smart Nodes can take, the commission goes up to incentivize node operators to join and vice versa.

Deposits, rewards, and commissions for Smart Nodes are represented by Rocket Pool’s nETH, which nodes receive if they stop participating in the system before smart contracts on Ethereum 2.0 are implemented. .

Rocket Pool creates a base pillar for Ethereum 2.0 consensus.

By making staking more accessible, easier, and more profitable than it can be done natively, Rocket Pool incentivizes more users to participate in Ethereum 2.0 consensus, therefore better securing the network. .

Still, while it’s encouraging that the team has vast experience working on the project since 2016, Rocket Pool adds smart contract risk to staking and running nodes.

Trust nodes will also be responsible for reporting data from Ethereum 2.0, effectively acting as an oracle.

Meanwhile, the nodes’ commission is 20%, and the node utilization is 100%, which means that more users are willing to stake ETH than Smart Nodes available

Rocket Pool’s focus on decentralization, trustlessness, and neutrality will become a building block for centralized and decentralized services on Ethereum 2.0

By the time phase 2 is live, Rocket Pool’s solution will be battle-tested, so it will make more sense for teams to plug into it instead of spinning up staking infrastructures.

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