Rocket Pool

Introduction to Rocket Pool (RPL)

Rocket Pool (RPL) is a decentralized Ethereum staking protocol that allows users to participate in Ethereum 2.0 staking with as little as 0.01 ETH. Founded in 2016, Rocket Pool is one of the oldest and most trusted staking solutions in the Ethereum ecosystem, designed to make staking more accessible, decentralized, and efficient for everyone. RPL tokens serve as the native utility token of the Rocket Pool ecosystem, playing a crucial role in the protocol's governance and security model.

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What is Rocket Pool (RPL)?

Rocket Pool (RPL) is a first-of-its-kind liquid staking protocol built on Ethereum that enables users to stake ETH without running a full validator node, which typically requires 32 ETH. Instead, Rocket Pool operates through a network of decentralized nodes, creating a more accessible and democratized staking environment.

The protocol's native token, RPL, functions as a utility and collateral token within the ecosystem. Node operators in Rocket Pool must stake RPL tokens as insurance against slashing penalties, representing at least 10% of the ETH value they manage, which creates a security mechanism that protects the network.

How Does Rocket Pool (RPL) Work?

Rocket Pool operates through a unique dual-sided marketplace that connects ETH stakers with node operators:

• For stakers: Users can deposit any amount of ETH (minimum 0.01 ETH) and receive rETH (Rocket Pool ETH) tokens in return. These liquid staking tokens represent both the initial deposit and accrued staking rewards.
• For node operators: Individuals can run Rocket Pool nodes by providing 16 ETH (rather than the standard 32 ETH required for solo staking) plus RPL tokens as collateral.

The protocol combines the 16 ETH from the node operator with 16 ETH from the staking pool to create a standard 32 ETH validator on the Ethereum network. This innovative approach reduces the entry barrier for node operators while maintaining decentralization.

Staking and Mining with Rocket Pool (RPL)

Rocket Pool is specifically designed for staking, not mining, as Ethereum transitioned from a proof-of-work to a proof-of-stake consensus mechanism with "The Merge" in September 2022.

Staking with Rocket Pool:

• Liquid staking: Users can stake any amount of ETH and receive rETH tokens, which increase in value over time as staking rewards accumulate. These tokens can be freely traded or used in DeFi applications.
• Node operation: Users can become node operators by staking 16 ETH plus RPL as collateral (minimum 10% of the ETH value in RPL). Node operators earn ETH staking rewards plus additional RPL rewards.
• RPL staking: Node operators stake RPL tokens as collateral, and in return, they receive regular RPL rewards, distributed approximately every 28 days based on the amount of RPL staked.

Unlike traditional mining, Rocket Pool staking is energy-efficient and aligns with Ethereum's environmentally friendly proof-of-stake mechanism.

What is RPL Used For?

The RPL token serves several essential functions within the Rocket Pool ecosystem:

1. Collateral for node operators: Node operators must stake RPL tokens worth at least 10% of their ETH value to protect against penalties.
2. Protocol governance: RPL token holders can participate in governance decisions about the future development of Rocket Pool.
3. Reward distribution: Node operators receive additional RPL rewards for providing security to the network through their staked RPL collateral.
4. Protocol insurance: The staked RPL creates a safety mechanism that helps secure the entire ecosystem.

RPL Token Distribution and Launch

Rocket Pool (RPL) launched with a fair distribution model that avoided VC funding or pre-mines. The initial distribution of RPL tokens occurred as follows:

• RPL was initially distributed through a token sale in October 2017.
• The total supply of RPL is capped at 18 million tokens.
• The team allocated 5% of the supply to support development and growth.
• The remaining 95% was made available to the public through various distribution mechanisms.
• There was no pre-mine or founder allocation beyond the development fund.

This fair launch approach has contributed to Rocket Pool's reputation as one of the most decentralized staking protocols in the Ethereum ecosystem.

Additional Benefits of Rocket Pool (RPL)

Rocket Pool offers several advantages that set it apart from other staking solutions:

• Decentralization: Unlike centralized staking services, Rocket Pool distributes validators across many independent node operators.
• Lower barrier to entry: Becoming a node operator requires only 16 ETH instead of 32 ETH.
• Liquid staking: The rETH token enables users to maintain liquidity while still earning staking rewards.
• Trustless operation: Smart contracts handle all operations without requiring trust in a central authority.
• Community governance: The protocol development is guided by community input and governance.

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