Decentralized Ethereum 2.0 Staking with Rocket Pool | Darren Langley & Dave Rugendyke

Rocket Pool is live on mainnet! Slowly rolling out its staking pools, Rocket Pool is opening up its decentralized ETH staking product to the world. Core team members Darren Langley and Dave Rugendyke join to talk about the past, present, and future of the protocol. Rocket Pool allows ETH holders to stake without needing to run a full node, which requires hardware, maintenance, and 32 ETH. Abstracting away those requirements helps to decentralize Ethereum's Proof-of-Stake, which is expected to arrive with the merge in the first half of 2022. ------ 📣 OPOLIS | YOUR CRYPTO CAREER https://bankless.cc/Opolis ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALING ETHEREUM https://bankless.cc/Arbitrum 🍵 MATCHA | DECENTRALIZED EXCHANGE AGGREGATOR https://bankless.cc/Matcha 🔐 LEDGER | SECURE YOUR ASSETS https://bankless.cc/Ledger 🧙‍♀️ ALCHEMIX | SELF-PAYING LOANS http://bankless.cc/Alchemix ------ TOPICS COVERED: 0:00 Intro 7:00 Launching Rocket Pool 15:50 How We Got Here 23:38 Why Decentralized Staking? 28:37 What the Numbers Say 34:38 A Public Good 39:40 The Community 47:11 Centralization Risks? 49:25 rETH 56:04 Democratizing ETH Staking 1:02:39 DeFi Integrations 1:06:30 MEV 1:14:25 Operating a Node & ODAO 1:22:02 RPL Token & Incentives 1:32:02 What's Next? 1:38:20 Closing & Disclaimers ------ RESOURCES: Darren on Twitter: https://twitter.com/langerstwit?s=20 Rocket Pool: https://rocketpool.net/ Node Map: https://stake.rocketpool.net/network RPL Investment Thesis: https://www.reddit.com/r/ethfinance/comments/m3pug8/the_rocket_pool_investment_thesis/ ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:10Ryan Sean Adams?

  Hey Bankless Nation, welcome to another State of the Nation episode. We're super excited to host this. It's been a long time coming. It's with our friends at Rocketpool. Rocketpool, David, why don't you tell folks what Rocketpool is?

• 0:23David Hoffman?

  Yeah, Rocketpool is a decentralized staking as a service system. And Rocketpool has been around for a really long time. I remember paying attention to Rocketpool back during the ICO craze, the ICO days. And Rocketpool has just been laser focused on one thing and one thing alone, which is providing a decentralized staking pool system to further democratize and decentralize access to providing security for Ethereum. So we're going to dive into what that means and the story thus far for Rocketpool. And also, most importantly, their mainnet launch, which is why we're having them on right now. Their mainnet just launched. So congratulations to the Rocketpool community and Rocketpool team and Dave and Darren, who have been through

• 1:04David Hoffman?

  it all throughout the bear market and then finally went through, got through the other side of the bear market, waiting for all of the Ethereum 2 devs to actually ship proof of stake. And now that it's finally here, Rocketpool is following along in the footsteps of Ethereum at large.

• 1:20Ryan Sean Adams?

  So I think this is probably the next best thing to staking on your own validator. In fact, it's probably the best thing for a lot of folks because staking in your own validator still requires 32 ETH. That's a lot of money, man. Like 32 ETH. So if you don't have 32 ETH and you still want to stake the decentralized way, Rocketpool is providing the answer to that. And so we're going to talk to the team today all about it. We're going to talk about the wider ETH staking ecosystem too. So we hope you hang out for this conversations can be great with David and Darren from Rocketpool. Before we get in, we got to tell you about Opus. I think this is one of the last days that we're going to be talking about this. Opus is a DAO that supports

• 2:05Ryan Sean Adams?

  self-sovereign workers, basically. This is the new creative class of worker that Dave And I are super bullish about, right? So if you've ever, and I, I hear people say this all the time, they're involved in multiple DAOs and they're like, I would quit my corporate job in a heartbeat and go work for a DAO, but I can't because I live in the US and I need health insurance. I need my benefits. Uh, I need like payroll and taxes done for me. That's what Opus does. So it is a DAO that supports self sovereign workers in this new economy, provides them health insurance options. And you gotta go check them out because right now, if you do, there's a special bonus for listeners to the bankless podcast.

• 2:45Ryan Sean Adams?

  You get a thousand work tokens, but a thousand bank when you join Opus by January 1st and end of year. Now's the time to be thinking about your benefits, what you're going to be doing in 2022, whether you still want to work at that soulless corporate job that you work at right now, or whether you want to take the dive into a DAO. This is a good time to investigate it. So click the link in the show notes and you could chat with a membership steward at Opus today. David, some other things going on in the bankless nation, man, we're dropping some hot podcasts recently. So there was one on Monday that was with Polygon. What was that all about?

• 3:21David Hoffman?

  Yeah, Polygon, which is what we've been calling the Swiss Army knife of scaling solutions. There's been a bunch of drama recently about abandoning Ethereum because abandoning, because Ethereum abandoned its users.

• 3:31Ryan Sean Adams?

  Well, around here, sir.

• 3:32David Hoffman?

  The Polygon team disagrees. Uh, and so, uh, we brought on a Mihalo and Sandeep of the Polygon team to just, uh, unpack really the Polygon vision and what it means to have a vibrant layer two ecosystem rather than having a single monolithic chain. So that was fantastic. And then also that, what came out this morning is also a, um, a layer zero with Tim Baker, Tim Baker, who's the new all core devs lead, managing the, the core devs of Ethereum, uh, kind of coordinating everyone to make sure they're on the same page. Tim Baker really, uh, came on to my radar when he's really pioneered EIP 1559. So, uh, we unpacked what it's like to be at the deepest levels of Ethereum development, what it's like to actually push changes to Ethereum and

• 4:14David Hoffman?

  just a lot of lessons about the, the dynamics of clients and client diversity, which is also going to be a bit of a subject here today on the show with Rocket Pool as well.

• 4:23Ryan Sean Adams?

  Well, now that is an individual who works for a DAO, right? Ethereum being sort of one of the original DAOs for sure. So that'll be an interesting story. I haven't caught up with that podcast yet, David, but it's in my queue. Let me start with the question I ask you every single state of the nation. What is the state of the nation today, my friend?

• 4:39David Hoffman?

  Yeah, the state of the nation is sinking, which is kind of an interesting word. But for longtime Bankless listeners, you might be reminded of the protocol sync thesis, which I think really underpins a lot of what we talk about here at Bankless. The protocol sync thesis in a sentence is that the most credibly neutral, the most protocolized components of Ethereum sync down to the bottom and allow other people to build on top of that. And the more and more we can find things that are more credibly neutral, are just more protocolized, less governance, things like Uniswap, for example, are deep in the protocol sync. Things like ENS are deep in the protocol sync. Many, many things are built on these things. And Rocketpool is really a piece of infrastructure that is at the deepest level of the protocol sync, very core to Ethereum.

• 5:24David Hoffman?

  And when something like Rocketpool comes online, we all get to go a little bit deeper down the protocol sync. So Ryan, today, we are sinking.

• 5:31Ryan Sean Adams?

  Sinking, but in a good way. This is a sinking that makes our systems more robust and more decentralized and is a core part of the Bankless thesis that we've been talking about so much. So we will be back to talk all about that, to get into the Rocketpool story with Darren and Dave. But before we do, we want to thank the sponsors that made this episode possible.

• 5:52David Hoffman?

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• 6:35David Hoffman?

  If you're a developer and you want to save on gas costs and overall make a better experience for your users, go to developer off chain labs.com to get started building on Arbitrum. If you're a user, keep an eye out for your favorite DeFi apps building on Arbitrum. Many DeFi applications that are on the Ethereum layer one are migrating over to layer twos like Arbitrum. And some are even skipping over layer ones and deploying directly on layer twos. There are so many apps coming online to Arbitrum. So go to bridge dot Arbitrum.io and start bridging over your ether or any of the tokens listed. And start having a DeFi experience that you've always wanted. Living a bankless life requires taking control.

• 7:11Ryan Sean Adams?

  So early.

• 7:12David Hoffman?

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• 7:55Ryan Sean Adams?

  Hey guys, welcome back. This is our episode on super staking, super staking ETH with our friends from Rocketpool. We have Darren, who is the general manager at Rocketpool, also Dave, who is the CTO of Rocketpool. Darren, Dave, great to have you guys back on Bankless. How's it going?

• 8:11Speaker 02

  Good, good. It's great feedback. I think last time I had a chat with Dave, it was probably a bit over a year ago now, I think. Yeah, yeah, it's crazy that content's already a year old. Yeah.

• 8:21Ryan Sean Adams?

  I'm surprised he hasn't tried to recruit you into David Dow yet, Dave.

• 8:26Speaker 02

  Well, matter of fact.

• 8:30Speaker 02

  Talking about that previously, so yeah, I shall be in there in there shortly. Apparently there's over 200 Daves in there now, which is.

• 8:37Ryan Sean Adams?

  Oh my gosh, I just set up your shield, David.

• 8:41Speaker 02

  Thank you. Thanks for doing.

• 8:43Ryan Sean Adams?

  And how's it going Darren? Is there a Darren Dow yet or do you focus on Rocketpool still?

• 8:49Speaker 03

  There is, there is not a Darren Dell. They won't be for a little while.

• 8:54Ryan Sean Adams?

  That's great. Well, it's fantastic to have you both on. We've been wanting to do this for a while, particularly post-launch. And I know, look, this has been the year of ETH staking, massive year. I think tomorrow, it'll be a year since the beacon chain launched and ETH staking was available. And I remember a year ago, at this time, how all of us were very worried about issues with the beacon chain, like with the launch to go successfully. And then if it does launch, would we get the the amount of stake necessary to actually fire up the beacon chain? And everyone was worried, will we get, you know, I think it was like, how much was it? 500,000 we were looking for ETH staked was

• 9:33Ryan Sean Adams?

  sort of the threshold. Now we are well beyond that. Okay, we have left 500,000 behind. And I know Rocketpool has been a part of the ETH staking story from from inception. And two weeks ago, Rocketpool launched on mainnet, which is huge, because I know you guys have been working to launch this, right? Working to optimize for decentralization. I'm gonna shout out a few stats. In the first two days of operation, Rocketpool registered 237 node operators across 42 global locations with 1,000 over 1,000 ETH staked. That's huge. I know it's been more than

• 10:14Ryan Sean Adams?

  two days now, but I just want to say, congrats to both of you. On behalf of Bankless, congrats to the Rocketpool team, the Rocketpool community. How does it feel to be on the other side of a major launch?

• 10:25Speaker 02

  Honestly, after this long, it still doesn't quite feel real, because we've been building this now for so long. Like, we were probably the only platform that existed for the previous version of staking, which was smart contract, like over three, four years ago. So to kind of get through that, get through launch, get through the ability for smart contracts to receive withdrawals, which was a key part to Rocketpool being truly decentralized for If they're even too staking, um, yeah, it's, it's been a ride, but we, I'm absolutely stoked like we are launched now. So it took uh an absolute ton of work. Uh, our community was, has been absolutely amazing through that, like huge shout out to those guys because they've been backing us a hundred percent.

• 11:03Speaker 02

  Like there's been, there's been delays. We've had, you know, like, if you can attest that we've had five betas up to this point, which is an absurd amount of betas for any project to have. Um, uh, you know, we've been through multiple rounds of audits. So, um, yeah, the patience with our community as well and their support is kind of really, really driven Rocketpool to get to this kind of successful launch. So yeah, huge shout, huge shout out to them and basically everyone else that's kind of repped us and backed a decentralized solution to staking today because I mean, that is necessary for the ecosystem uh at large. I mean, we've seen a large amount of exchanges kind of, um, you know, centralizing a large portion of the staking. So now hopefully we can kind of counter that with a balance to our current client diversity at the same time.

• 11:47Ryan Sean Adams?

  Darren, you feeling that too? You feeling that energy? How's it feeling on your side?

• 11:51Speaker 03

  It's uh, it's been a very exciting ride to be honest. Um, uh, we were kind of heads down getting the development done. And now that the, um, uh, now that the, uh, it's actually launched and it's, um, kind of fantastic. Actually a little update on the kind of numbers. Um, so we're at twenty five thousand ETH at the moment and being staked across, um, across Rocketpool. Sorry.

• 12:19Ryan Sean Adams?

  Yeah.

• 12:24Speaker 03

  That's all right. I'm going to turn that off completely.

• 12:29David Hoffman?

  Yeah, Darren, you, you, you're front running us on the numbers. Uh, twenty five thousand ETH stake. Uh, how many node operators do you have now?

• 12:36Speaker 03

  Uh, so four hundred and fifty.

• 12:37David Hoffman?

  Four hundred and fifty.

• 12:38Speaker 03

  Node operators, uh, across, um, fifty nine global locations. Um, so yeah, so it's, it's, it's really kind of going well. Um, it's actually been, uh, so we've actually only really been operating for ten days, um, uh,

• 12:53David Hoffman?

  Yeah.

• 12:53Speaker 03

  Kind of full bore. Um, the, the rest of the time we were. Um, kind of going through a staged, a staged launch. And so we were kind of staggering out our launch. We've only really been operating for 10 days. So to get that far in then we were is we've kind of blown away. So it's amazing.

• 13:11Ryan Sean Adams?

  So now, just to be clear, there are no governors on. There was previously some caps in terms of, I know when you first launched, how much ETH could be deposited, but now all of those governors are gone. It's completely open for anyone to, to stake their ETH. There's no cap or governor on top of it. Is that correct?

• 13:30Speaker 03

  That's right. Exactly.

• 13:31Speaker 02

  We do have a deposit pool size limit, but that's baked into the protocol as a kind of a safety mechanism. So beyond that, that's 2000ETH. So yeah, if the deposit pool ever kind of gets that maximum amount and there's no node operators coming online, then the commission rate for new node operators to stake their ETH goes up significantly to kind of incentivize them to come on. So that's the only kind of real cap that we have at the moment, but it's actually part of the protocol.

• 13:53David Hoffman?

  Right. It's a resource management part of the protocol, right?

• 13:57Speaker 02

  Exactly. Exactly. So the more ETH that's in Rocketpool that isn't staking kind of drags down the rewards for our ETH users. So we can't have too much of that, which is why we kind of limit it to 2000, which is a pretty, pretty hefty amount, but still not so much it would drag down. It would add idle ETH to the, to the protocol. Just something we don't want too much of.

• 14:17David Hoffman?

  And listeners who are familiar with the dynamics of ETH staking might notice that this is actually kind of a fractal off of how ETH staking works, where the, the more and more ETH supply that's supplied to the Ethereum protocol, the more total Ether is issued, but the less Ether is issued on a per individual unit basis. And Rocketpool is managing the supply in a similar way. If there is more, if, if more nodes need to come to Rocketpool, because the Rocketpool has plenty of ETH staked, more RPL will be issued to nodes to incentivize them to spin up more nodes. So it's kind of, it's creating an equilibrium based off of the, the available resources that needed to be added to the Rocketpool network. That'll correct.

• 14:57Speaker 02

  Yeah, that's, yeah, that's, that's pretty close. Yeah. So we have, we have, um, we, we essentially cater to two main user groups. And we have users that want to kind of stake, uh, doing a liquid staking with the, the RA token. This is basically a token that you hold at Games Rewards over time, based on the average performance of all the validators in the Rocket Pool decentralized network. So that's, these are guys that would, you know, typically not want to run a no, would just be happy to kind of sit on, um, you know, uh, uh, token that gains rewards over time, based on the performance of the decentralized network. Uh, the other, the other half of the audience is obviously the no dog pres that needs to do the staking. So these are the guys that are really kind of backbone in the network. And they have the most to gain, um, by participating in Rocket Pool. So they could stake their own other outside Rocket Pool, but if they come inside Rocket Pool,

• 15:41Speaker 02

  they also earn additional commission and also RPL rewards on top of that to incentivize them to, uh, join the protocol and, you know, kind of help out with decentralized staking.

• 15:50David Hoffman?

  So we actually have so much to talk about with, we want to talk about our ETH, because the market for a staked ETH derivative tokens, I think is going to be really, really big. Uh, we definitely want to fully unpack the RPL token. Um, so, but before we go in and talk about all the subjects all at once, I actually want to back up and kind of just give listeners a quick little history lesson about Rocket Pool and how it came to be and why, what was the motivation for designing Rocket Pool at all? So can you guys just kind of speed run us through the last like three to four years of Rocket Pool history and how you guys have gotten to be where you are?

• 16:24Speaker 02

  Um, yeah, I can probably start at that. So, uh, back in about mid 2016, um, there was a, um, oh, there was kind of on the roadmap for Ethereum at that time was, you know, the proof of stake, uh, proof of stake then back then was actually done through a smart contract. The beacon chain, as we know today, didn't exist back then. It was all going to be deposits into a smart contract and whatnot. And back then, these deposits, uh, originally started out at 32 ETH. Then they kind of realized that scaling involved to have a smart contract kind of doling out rewards and all that would basically clog the network. So you need, in order to, uh, kind of, Get around that. They raised the staking cap to, I think it was a thousand ever per validator, which is by today's standards, it would just be absolutely asinine. So, um, so yeah, obviously back then they realized that was a huge issue.

• 17:09Speaker 02

  Um, I was kind of looking for a project. Oh, I, I personally, I've been in the blockchain scene since about two thousand thirteen. Um, and I was, you know, well aware of Ethereum, was kind of looking for a project to kind of sink my teeth into, uh, learn about smart contracts. Uh, so I was insanely interested in them at the time. I thought it was an absolutely amazing concept. Um, yeah. So basically came up with the idea, you know, it's such a high amount of ether, whether it's thirty two or a thousand back then, you know, people obviously need to kind of combine their ether together in order to earn rewards. So, um, yeah, I started on prototype of Rocketpool way back then, based on, uh, something called the MoF paper, which is a paper that Vitalik put out.

• 17:49Speaker 02

  Uh, I think it was in mid to late two thousand and sixteen, and it's basically outlined the functions that would be embedded into, uh, this early smart contract version proof of stake. So that allowed me to kind of write Rocketpool to, to plug into that because we already had a pretty early definition of how the, the functions would work. So, uh, anyway, fast forward about another nine months after that. Um, I think it was about mid two thousand and seventeen, released the alpha version of Rocketpool. Um, from there, it got an absolutely massively good reception, uh, on Reddit and a few other of the busy Ethereum hubs at the time. Um, yeah. And since then, we've basically just gone through, um, we obviously, we also did a, a token, uh, sale two thousand and seventeen that,

• 18:31Speaker 02

  uh, happened about three months before the bear market did. So we, um, that was, that was timing wise, that was interesting. But we basically got away on a pretty compact team for the next, uh, year until around two thousand and eighteen, when we released our first beta, the same week they announced they were pivoting to the beacon chain. So, uh, so we still went ahead with that beta anyway. I think we were the only, the only project to ever actually use the previous version of proof of stake, uh, for Ethereum. So you could kind of say Rocketpool was operating on previous, a couple of years before it was even available.

• 19:03Ryan Sean Adams?

  Yeah, David, can we just, can we just pause there, Dave, for a minute? Because like, I, I just want for Who weren't there in 2018 to realize this. So like, I remember this very clearly. And Proof of Stake was going to launch in 2018, that smart contract Proof of Stake version on Ethereum. In fact, it was like written into some of the clients. I believe like the code was was ready. The code is prepped. And then I recall some kind of meeting of the minds with Ethereum cord devs and researchers. And they did like a complete rug pull on it is what it felt like to be a member of the community at that time. Like, I know there were good reasons for it.

• 19:45Ryan Sean Adams?

  And it totally makes sense retrospectively. But for someone working on staking for the previous like 18 months, two years, how did that feel? And like, why did you stick with Ethereum during that time, guys?

• 20:02Speaker 02

  Well, personally, I was always a pretty massively into Ethereum. I just, like I said, I love the concept of smart contracts. That wasn't really available anywhere else at the time. So I pretty much embedded myself in the Ethereum ecosystem. And a lot of people I met along the way were super nice and lovely people as well. So that was just a pleasure to kind of work in that environment. At that time, though, when that did happen, I mean, that that was a pretty big shock. We actually heard rumors maybe a week or two before it officially landed, that that was possibly what was going to happen. So that was just a rumor at the time. And I know, Lang, as you're around then as well, when this was kind of going down. So yeah, basically, once that happened, we pretty much just had to

• 20:45Speaker 02

  take a really close look at the kind of new proposed system, see what elements of Rockpool would carry over to that one. Luckily, most of the core concepts and the way we kind of organize deposits into mini pools, which is our version of validator. Most of that still, you know, carried over quite, quite well. Obviously, we weren't baked into, you know, a layer one consistent as much because now we have to do depend on two different chains, the chain, the beacon chain and the layer one chain. So that required some, a couple of additional fixes, but The time it was, yeah, it was a little, it was a little hairy and um yeah, honestly, it was, it was a bit disappointing because I mean, when you put work into something for two plus years.

• 21:27Speaker 02

  And you don't really get an official heads up before the main announcement comes out. That, yeah, that was, that was a little bit of a gut punch, but you know, we, we, we rolled with it and um, yeah, we're, we're still here. So Langens was actually around then too, so. I actually want to throw in your thoughts like this.

• 21:43Speaker 03

  Yeah, well, I think, once um, once the, the shock had worn off a little bit, uh, the realization, especially when you um, dig into uh, what was produced at that point. Um, why they were doing it, um, what the new beacon chain would look like and that, and that sort of thing. Uh, from somebody who is kind of quite deep into it, uh, it made so much more sense. Um, and uh, the, the design that we've ended up with is, is so much better than, than it, what it, than it would have been. So um, it kind of, uh, it, that, that kind of made it bittersweet, I guess. It was definitely, um, uh, definitely much better.

• 22:20Ryan Sean Adams?

  Worth the wait.

• 22:22Speaker 03

  Worth the wait.

• 22:23David Hoffman?

  And this is why I, I think this, the Rocket Pool story, I think is just a fantastic, just like, again, fractal off of the, the larger Ethereum story where the Ethereum story is like, man, we really got to figure out this proof of stake thing. Let's start building it. Oh no, we need to go in a different direction. Meanwhile, you have the Rocket Pool team, like, you know, waiting for the Ethereum proof of stake to actually like, exist so it can build its thing, right? And so like trying to be running and developing in parallel with Ethereum. While Ethereum is trying to figure its shtick out, uh, and then once, once Ethereum actually does commit to one specific roadmap, well then, now then the Rocket Pool community can actually, actually inject the energy into the, the finalized, you know, solidified foundation.

• 23:05David Hoffman?

  And so like where, like, all the Ethereum people were like waiting for proof of stake, proof of stake. All of the Rocket Pool people, pool people were waiting for Rocket Pool, who was waiting for proof of stake, right? It was, it's just like this, uh, the, this fractal of, of these communities just playing off of each other.

• 23:21Speaker 02

  Yeah, that's very much it.

• 23:25Speaker 03

  So I think being on the being on the edge is a lot of fun.

• 23:30Speaker 03

  As long as you don't fall off too many times. But it's it's definitely fun. We're kind of working at that bleeding edge.

• 23:38David Hoffman?

  And definitely one of a similar motivations, like, you know, people stuck to Ethereum because they believed in Ethereum. And you guys stuck to Rocketpool because you believe in Rocketpool. But let's back up and just articulate for the listeners. Why was so obvious that something like Rocketpool would need to be built so early in Ethereum's lifespan? Like, Dave, you're looking at Ethereum, you know, it's committed to proof of stake. And all of a sudden, you realize that, like, oh, this thing called a decentralized staking pool must need to exist at some point in time. Why did you know that that was true? And what is the Rocketpool vision?

• 24:12Speaker 02

  So basically, at the time, yeah, around 2000, mid 2016, when I kind of came up with the concept. Bitcoin was obviously, you know, the king at the time is still to some degree. But back then, it was pretty much concentrated around a couple of monie pools. I mean, that was kind of the trajectory that Ethereum was going to head on with proof of stake as well. If, you know, a decentralized solution didn't present itself. So that's what really kind of made me put my head down and kind of come up with the initial concept of how it would work. It's taken a long time to get here, so it wasn't an easy thing to produce. But yeah, it's, I mean, as far as Rocketpool itself goes, I think the main thing I'm probably, you know, proudest of

• 24:57Speaker 02

  is obviously the decentralized nature of it and also the client diversity. Because that's something that we really kind of need to promote within Ethereum itself, especially with the staking. Because currently, it is centralized around kind of one main client. And again, that's not a healthy thing for the ecosystem. So we are pretty much all about kind of, you know, enabling Ethereum to be a healthy ecosystem and not too centralized around any central aspect. So that's kind of what we've been promoting essentially.

• 25:28David Hoffman?

  Darren, anything to add on to that?

• 25:31Speaker 03

  Yeah, so I think, I mean, we've only really been in operation for a little while, so it's difficult to tell. But we are already kind of seeing a bit of an effect on the client diversity.

• 25:44Speaker 03

  We've implemented in our kind of the way that you install our software. And we have a thing that essentially suggests if you if you choose Prism, we suggest, you know, you can you can still choose Prism if you want to, because we're not going to censor clients. But we suggest you choose another client. And we're already kind of seeing that in some of the proposal numbers and from the Rocket Pool proposes. And that Lighthouse is definitely popular, but other clients as well are very popular. So Nimbus is very popular and Antaku as well. And Prism is kind of a smaller percentage of our kind of node base so far.

• 26:29Speaker 03

  And that will obviously change over time, but we're already kind of seeing that, which is really nice to see.

• 26:34David Hoffman?

  And of course, a big part of the Rocket Pool story is actually reducing the barriers to entry for ETH staking, right? Once again, like Dave said, once upon a time, it actually was required to have a thousand Ether to stake in order for proof of stake. That has since changed down to down to thirty two. But then also thirty two ETH has moved from, you know, where it used to be a ten thousand dollars up to where it is now with that over, I'm not going to on the fly math, but over hundreds of thousands of dollars.

• 27:02Ryan Sean Adams?

  Yeah, three hundred and twenty K. Let's just say that. Let's imagine a world where ETH is ten K already. I'm living in the future, David.

• 27:11David Hoffman?

  Ryan's hiding the fact that he can't do quick math either.

• 27:15David Hoffman?

  But so, yeah, so like a hundred thirty, three hundred and twenty thousand dollars, like,

• 27:21David Hoffman?

  or, you know, this is, it's too much for one person. But also, that's not only that's not only the whole story either. Because the cool thing about Rocket Pool is if you don't have ETH, you can bring a node. And if you don't have enough nodes, you can bring your ETH, right? And so like, which which are the resources do you want to bring to the network? Rocket pool can can match make between the node suppliers and the ETH suppliers. And and and correct me if I'm wrong, but I think of all staking as a service providers out there. I think the the next highest one is only coming in at like 13 individual nodes where Rocket Pool is clocking in over 400. And also doesn't have any constraints on the total number of nodes that can be contributed to the overall overall network.

• 28:06David Hoffman?

  Is that right?

• 28:09Speaker 02

  Yeah, that's correct. Yeah, so it's obviously built in the protocol that we incentivize these node operators to join. And in words, we don't restrict any one party pretty much if you can register a node with our network with the protocol, I should say. Then, yeah, you're free to free to join. I mean, everything's balanced within Rocket Pool through incentives built into the protocols. We don't need to enforce any kind of restrictions on location or anything. Everyone should work in everyone's best interest based on the kind of tokenomics and mechanics that are in the protocol.

• 28:38Ryan Sean Adams?

  So it's permissionless for nodes to join the network. I want to maybe share some some metrics here. This is on the Dune dashboard on Dune Analytics dashboard on Rocket Pool. So just making sure that everybody listening kind of understands some of these numbers here. So the total ETH amount staked is over 24,000, as we mentioned. Total ETH submitted to Rocket Pool. Is there some ETH like that's pending in a pool? Because this number is 20 over 27,000. What does this number tell us?

• 29:13Speaker 03

  Yeah, so there's there's a deposit pool that is.

• 29:19Speaker 03

  Actually, I need to double check where those numbers come from, but there is a deposit pool, yeah. So there's you deposit into our ETH stake is deposit into a deposit pool. And then that gets matched with 16 ETH from other operators.

• 29:33Ryan Sean Adams?

  And then we have 450 registered node operators. So these are individuals or, you know, companies or groups, whatever. These are individual nodes inside of the network. Do each of these 450 represent an independent entity? Or do you have any any way of knowing whether they do or not?

• 29:55Speaker 02

  We pretty much only require a node address to be registered. So we can't tell, we don't hold any specific information about any node operators or anything. It's part of being a permissionless kind of protocol. So they are free to register from wherever they are. But one thing we do provide is when they do register, they have the option to also register their time zone. So this kind of gives us a really good, and this is auto detected from the system. So if you do register your time zone and it is auto detected, yeah, we can, we have a network map which builds out, which shows you how diverse the actual node operator base is. So if you actually go to our website, you can view a network map where we display this out for everyone to see. So you'll

• 30:36Speaker 02

  basically see nodes from all across the world. So yeah, it should be a staked up rocket pool

• 30:41Ryan Sean Adams?

  done it. Stake dot rocket pool.net.

• 30:45Speaker 02

  Yep.

• 30:47Ryan Sean Adams?

  And this will show.

• 30:51Ryan Sean Adams?

  Uh, let's see, I'm just pulling this up here.

• 30:54Speaker 02

  And now if you go to the side there, that little side menu and you click on, yep, the network map.

• 31:05Speaker 02

  Yeah, so that's, that's the network map. Yeah. So that's built out of the nodes that've registered on the protocol. So the only thing we record, and this is optional, like you can see down the bottom there is a hidden section. So if you don't want to reveal your time zone as a node operator, that's perfectly fine. We're not going to enforce you do that. So yeah, this shows you a pretty broad general map of all the node operators, their location, the corner that's being staked in that location. So you can see if it's centralized around any one kind of area. And this is, this is a very broad kind of map too. It is actually broken down into much more individual time zones. But obviously to show this on a map, we need to kind of group them together as well.

• 31:43Ryan Sean Adams?

  So for those who can't see this, or maybe listening in the podcast, we'll include a link in the show notes, but we're looking at a world map and we're seeing nodes across all of the different continents. So we've got 240 North American nodes, 119 European nodes, 20 Asian nodes in the Pacific as well, Australia, South.

• 32:05Ryan Sean Adams?

  America, some are hidden as well and this really spans the entire globe. And I guess that is the big distinction with Rocketpool, right? Like to date, no one has produced a staking pool network where it's permissionless to join as a node operator. And you guys have 450 node operators so far. That is the big distinction here. Is that correct?

• 32:27Speaker 02

  Yes, yes, that is definitely correct.

• 32:30Ryan Sean Adams?

  What is mini pools? What does that mean?

• 32:33Speaker 02

  That's our version of a validator basically. So that's Rocket validated, which is made up of 16 ever from a node operator. And also 16 ever from the protocol itself. So the protocol gets its ever from the deposit pool, which is what people send ever to when they wish to receive our RE liquid staking token. So they're basically staking themselves for free. So we don't charge node operators to stake in the network. So but and they also earn a commission for staking that other 16 ever that comes from the protocol from these RE users. So it's kind of a unique balancing opportunity where you balance deposits from people who are coming in that want to do liquid staking but not run a node. With those that do want to run a node and earn a high commission than they would staking solo or basically through any other way currently available.

• 33:17Speaker 02

  I think Rocket will be the most profitable way to stake with a node currently.

• 33:22Ryan Sean Adams?

  And there was another number there that we're going to talk about later. These are O Dow operators, right? So it's like the Oracle network, which we'll come back to later, but I wanted to show this this chart. I don't know how old this is. This is, you know, something I've seen before, but this is current, the current. It's a pie chart of all of the ETH staked and this is kind of grouped by entity. I'm not sure if this is completely up to date, but it gives you a representative view of ETH staking, at least in the last couple of months. And you could see some of the consolidation, as you're saying earlier, Dave, like you didn't, when you were starting Rocketpool, you didn't want it to start to resemble Bitcoin mining pools, right? Where it's just like centralized among a very few set of providers.

• 34:07Ryan Sean Adams?

  And we're starting to see maybe a little bit of that with ETH staking, right? We have Kraken with potentially 11%. And that is definitely a custodial exchange that is providing a staking service. We have Binance who's up there. I don't even see Coinbase on this list. That shows me that

• 34:26David Hoffman?

  Coinbase is sneaky with their addresses.

• 34:27Ryan Sean Adams?

  Yeah, okay, so something is missing here. Coinbase should definitely be here. We have Lido, which is spread across like 13 different validators. But anyway, I guess I want to ask the question, do you think that ETH staking to date is overly centralized? Like, do we have a problem here? Or do you think more that this could be a problem in the future? And that's why we need Rockpool. Dave, what do you think first?

• 34:53Speaker 02

  Yeah, I think it is heading in that direction. I mean, you can see that basically on this chart the way it is currently. And we also, like you said, Coinbase is sneaky with their their addresses as well. So, um, yeah, it's it's basically going to come a competition between the central providers who can obviously offer the most

• 35:11Speaker 02

  kind of the lowest fee to stake with them. So I do think over time you will see that, you know, centralizing more, but um, hopefully with Rockpool now kind of on mainnet, um, that won't be uh, an issue as much and hopefully will be minimized in the long term as, you know, potentially other decentralized staking services come along to.

• 35:29Ryan Sean Adams?

  Yeah. What are your thoughts on that, Darren?

• 35:34Speaker 03

  Yeah, I think that we're, it's, it's definitely um, centralizing and we need to go in the other direction. Uh, so hopefully that that is where we come in. And uh, the, the idea is to get our ETH in as many places as possible. Uh, to integrate it across uh, the whole of DeFi, um, in every wallet. Um, and all of that sort of thing. And a lot of people have been reaching out about that. A lot of protocols have been reaching out. So, um, it's, it's a to try and make uh, our ETH as ubiquitous as possible.

• 36:05Ryan Sean Adams?

  Last thought on this is-

• 36:06Speaker 03

  Essentially so that everyone has access.

• 36:08Ryan Sean Adams?

  Last question for you guys, and it's kind of the vision for Rocketpool is, do you see Rocketpool as kind of like a public good? Or like veering in that direction, right? So, you know, we've recently seen ENS launch a token, do an air job, for instance. And that is more skewed towards the public good side of the Ethereum DeFi ecosystem, right? So like, they don't view themselves as another kind of identity DeFi type Ethereum application. They're not a startup. Yeah, they're not a startup. They're more a public good. And I've heard you even talk about like, some things that you care about, like client diversity, which is interesting.

• 36:49Ryan Sean Adams?

  And of course, people in Ethereum, on the ETH2 team will recognize that there are multiple ETH2 clients. You know, there's Prism, there's Nimbus, there's many others. And it's kind of a public good to try to balance out the client usage and to make sure that one client doesn't dominate over the rest, that we don't put all of our eggs in one basket, and you care about that as well. So what are your thoughts on this? Is Rocketpool like a public good? Or is it veering in that direction? Or, you know, what do you think of that concept, Dave?

• 37:24Speaker 02

  Yeah, I definitely think we are veering in that direction, if we're not there already. Pretty much the goal from day one was to make it kind of a decentralized protocol that helps the ecosystem that it runs on. So it's pretty much a positive feedback loop where the bigger decentralized they can get, the better the ecosystem is, the better client diversity gets, and so forth. So we are trying to be as kind of hands-off from a kind of custodian kind of point of view, where we don't have direct control over the protocol. It's all run in it through incentives, basically. Incentives drive the protocol itself. So we don't really, we can't say, you know, this will happen here, this will happen there. It basically just all kind of drives itself through incentives.

• 38:09Speaker 02

  So hopefully that does work in, you know, the larger Ethereum protocol

• 38:16Speaker 02

  over the long term. And I do think it will have a positive influence. And that's kind of what we're going to try and kind of, yeah, do go forward.

• 38:25Ryan Sean Adams?

  Darren, anything, Dad?

• 38:28Speaker 03

  They've covered it quite well. On the spectrum, on the spectrum of things, we are definitely on the kind of protocol decentralized end, trying to be as kind of neutral and yeah, and yeah, as decentralized as possible essentially.

• 38:47David Hoffman?

  I'm going to use this word at least four more times during this podcast, but just like how this industry is an industry of crypto economics, Rocketpool is a crypto economic fractal off of, that was the word, fractal off of Ethereum. And so Ethereum uses crypto economics to sustain itself. It uses incentives to encourage people to buy and stake Ether to secure the network. And Rocketpool does the same thing, but with a more usable, more, more adaptive layer on top of Ethereum, that is a decentralized staking as a service system. And I think the people have definitely tapped into this particular angle that you guys

• 39:26David Hoffman?

  are approaching, the decentralization maxi angle and the one, the, the, the application layer of Ethereum, where the application actually resonates with the core protocol itself. ENS comes to mind, as Ryan said, but also Uniswap too. Some things just about in the Ethereum app layer just resonate more deeply with the Ethereum protocol. And that's definitely something that I found in, in the Rocketpool community. So I want to do, do a quick dive into the Rocketpool community. Who, who are they and like, what, what's their vibe? What do they really care about? And how did you guys garner such an engaged community in the depths of a bear market?

• 40:03Speaker 02

  This is going to be a landline question. I'm going to have to walk around. I'm going to cop a lot of stuff.

• 40:12Speaker 02

  Yeah, no, obviously we, we have a very passionate community. We pretty much always, always have. And I think that is driven from the previous question where you're working towards the benefit of the protocol itself, trying, trying to instill good in the thing that you're building on top of. So I do think that kind of comes through in the community. We have a lot of very passionate, some incredibly talented people too. Like a lot of the stuff that has been. Built for Rocketpool. So we have a metrics dashboard by VGR, which is really good. We have a bot in our Discord, which reports any events in the Rocketpool network done by Visible. So that was really good as well. So like we have kind of a metrics ourselves. We can kind of see what's going on in Rocketpool network at any time.

• 40:53Speaker 02

  But now, thanks to our community efforts in our Discord, any event that happens in the Rocketpool network is immediately reported by this bot. So and that's just, that's just the tip of the iceberg. I mean, we have people that do, you know, like various bots reporting, you know, RPL ratios, prices, stats, all that kind of stuff. Yeah, it's just been insane. Obviously, I'm going to have to mention the trading channel because this is pretty much the, the core kind of passion of our Discord. Does does show on through this channel and is, it is actually one that I created a few years ago to kind of like just put all central trading talk into the one spot. Because at the time, a lot of Discords didn't allow trading or kind of price talk.

• 41:35Speaker 02

  But I mean, that that's going to happen anyway. So there's no point in trying to kind of outlaw or ban it. So I just created the trading channel, snuck it down the bottom of the Discord at the time.

• 41:45David Hoffman?

  You just wanted to quarantine all that talk, huh?

• 41:49Speaker 02

  Well, I mean, it's going to happen anyway. And now it's just so much more than a trading channel. It's, it's just passionate people that analyze every aspect of the protocol. Like if we make the smallest change, it gets analyzed and analyzed. So it's grown beyond the trading name now.

• 42:03David Hoffman?

  It's a watering hole for Rocketpool.

• 42:05Speaker 02

  It is, it really is. And we have an absolute ton of other channels too, that go over more technical stuff like smart contracts, smart nodes, whole bunch of other stuff. And the people that participate in these channels are obviously extremely, some extremely talented people. So if we do ever look like we're going to put a foot wrong, I'm pretty sure we're going to get called out on that leagues ahead before it ever hits the main net. So we definitely get to listen to the community as much as we can.

• 42:27David Hoffman?

  Just for the listeners that are not watching this on YouTube, you know that the listeners are tuning in when they also start going hashtag training in the YouTube chat, trading in the YouTube chats and also channel trading is the new general. So like the Rocketpool community is here and. I really think it's the nature of how Rocketpool came to be that really is emblematic of something that was really conducive to create a community around it. Rocketpool was not this system that was going to generate this massive company with this massive vision. It was a very small set of core believers that let the community come around it, right? And again, love the word fractal here.

• 43:10David Hoffman?

  There's a lot of organizations like this in DeFi, like kind of with me and Ryan and with Bankless. Like, we didn't want to make a massive, big Bankless corporation. We let the DAO be the system that scales the message, right? And that really seems to be what's going on with the Rocketpool community, where it's the Rocketpool community that's taking the reins and just leaving Dave and Darren and the few other members of the Rocketpool team to actually be like the guys to build out the system. But what is the Rocketpool community stepping into the shoes of? Like, are they doing things that are just beyond what you guys are doing at the Rocketpool org? Like, what are they up to?

• 43:49Speaker 03

  Yeah, so actually, a lot of things that, well, first of all, their feedback is invaluable. So any time that we put out any sort of research or we put out any code or anything like that, their kind of feedback is invaluable in that. But the other thing, so things like, we have a huge list of integrations that we're aiming for across all of DeFi and wallets and all of that sort of thing. And so our community is kind of playing a part in the outreach to reach out to some of these protocols, to get information about these protocols, to explain some of the protocols to us,

• 44:29Speaker 03

  because DeFi is expanding so quickly that sometimes we need to catch up on that as well. So, yeah, they're kind of, I think every step of the way, they've been kind of building Rocketpool with us. So it's been fantastic.

• 44:45David Hoffman?

  Do you guys think that Rocketpool falls into the responsibility category? In the same way that ENS and kind of get people lumping Gitcoin into, where RPL is a responsibility token, since it manages the economic resources of a public goods?

• 45:00Speaker 02

  That's an interesting take. I hadn't heard of that one before.

• 45:02David Hoffman?

  Oh, really?

• 45:03Speaker 02

  Yeah. Yeah, no, I think that's pretty, pretty close to the point, actually.

• 45:08Ryan Sean Adams?

  I, I, I think, who, who was it? Brantley from E N S who coined this phrase?

• 45:12David Hoffman?

  Responsibility, yeah.

• 45:13Ryan Sean Adams?

  Yeah, after the E N S drop, he said, "You weren't airdropped money, you were airdropped responsibility." This is like, he's kind of like, "Hey, you're, you're holding a token, but this token is key to, you know, a, an important public good for the Ethereum ecosystem. Take it seriously. Like, do your job, actually govern this protocol and make responsible decisions." Does that resonate with the R P L use case in your community?

• 45:38Speaker 02

  Yeah, well, ours, ours is backed into the protocol as an insurance mechanism, essentially, for node operators. So, obviously, if you're depositing in the front end and you're getting R A, the liquid staking token, its value is driven by the performance of the node operator. So, basically, having built-in insurance is critical for that aspect. I mean, if you're going to have a decentralized liquid staking token that is, you know, abundant in the DeFi ecosystem, you need to have its value backed, you know, responsibly. So, this is done by node operators who stake a certain amount of R P L themselves, which if they, you know, ever mess, mess up massively, this gets practically slashed, then auctioned, sold, that it is then given back to the protocol to kind of make the R A users whole. So, that is an absolutely critical part of their infrastructure at the moment,

• 46:22Speaker 02

  to make sure that R A, the liquid staking token, is pretty much always going to have, you know, it, its value remain and not, not be slashed, not, not have any kind of issues happen to it, through a node operator's fault. So, that, that is definitely a critical part of our infrastructure. And a big responsibility for node operators to make sure, if they are staking a lot, they need to kind of stake a lot of R P L at the same time to make sure their insurance is adequate. And that they are rewarded for this, the more insurance that they basically give the protocol in the form of staking R P L, the more R P L they earn through inflation protocol, which is also backed into it, that is given to them as a reward for putting up this insurance bond. So, it, it is absolutely crucial, and I would say it's, the more R P L you stake as a node operator,

• 47:06Speaker 02

  the more you are kind of doing a, a good service to, to Rockpool.

• 47:11David Hoffman?

  So one question that's coming in from a core community member, I would say, super Fiz, is say Rocketpool is maximally successful and actually just becomes too successful. What happens if like more than 51% of all ethers staked via Rocketpool? Is this a centralization risk or is that kind of antithetical?

• 47:32Speaker 02

  Yeah, that's a really interesting one. I would say it's almost antithetical, but at the same point, you know, we are a smart contract based protocol, which does come with risk as well, which everyone should kind of take on board when they participate. So yeah, having more than 51% of validators going through Rocketpool, which also goes through smart contracts, which as I say, have their own kind of risk. So that would be a worry for me if we did ever get kind of that big. I'm sure there's ways that we could mitigate that at the time, but obviously since we are working towards, you know, being healthy to the ecosystem, that's something that we probably wouldn't want to happen and we'd probably try and head that off at the pass before it did happen in some way. I'm yet to think of, but I'm sure we could come up something.

• 48:16Speaker 03

  So I mean, one thing to bear in mind about that though is so Rocketpool doesn't actually have any influence over your validation duties. So the only point at which Rocketpool really comes into play is on deposit and withdrawal. So they're the two points at which we would, you know, there could be some sort of influence, but more in terms of, but because we're decentralized, you know, that's mitigated. So that's the only thing that, so we don't have to have any kind of influence over your validation duties necessarily.

• 48:57David Hoffman?

  So all things being held equal, if we could just somehow just eliminate the world of smart contract risk, there is no way where Rocketpool could have some sort of outsized control over the Ethereum network because it's not actually controlling the nodes. Is that the answer?

• 49:13Speaker 02

  Yeah. That's that's it. So we have, yeah, like 450 node operators right now. So yeah, that's definitely it. We're not running 450 nodes ourselves. I can assure you that. There's definitely, yeah, other people.

• 49:26David Hoffman?

  So I want to ask about our ETH. So let's go into the very basics of our ETH and we'll kind of talk about the game plan for getting our ETH integrated into DeFi. But our ETH is the staked ETH derivative token. So when you come to Rocket Pool, you deposit your Ether, you get our ETH in return. But our ETH is means it's supposed to capture the ETH derivatives that are generated by ETH staking. So can you guys unpack the dynamics behind how our ETH actually goes up in value and capturing the actual Ether issuance that's issued by Ethereum? Dave, you want to take that?

• 50:01Speaker 02

  Yeah. So with the R token, so it's designed a little bit differently to some of the other liquid staking tokens that are at this point. We actually came up with the idea of liquid staking almost two years ago. And you can go through all our blog posts on this, but we spent a lot of time kind of designing the mechanics, the way our ETH would work. Originally, we came up with the idea of perhaps doing a kind of a rebasing token where the value of your token is increased pretty much whenever it's moved. This creates kind of an interesting situation for various tax issues depending on your country. So I won't give you any tax advice, but if you are receiving, you know, constant rebasing on a liquid staking token, this can make tax very, very kind of hard to manage.

• 50:46Speaker 02

  And it's also kind of treats it as an income tax, whereas the way our ETH is designed is we created a token where once you get it, then it won't rebase. It's just an ERC 20 token. It's just perfectly normal. But the amount you get changes over time if you were staking through the front end of Rocket Pool, if that makes any sense. So it's treated more or less as a kind of a capital gains tax issue when you want to redeem your RETH forever. So that creates a single tax event. So that's something that we're very mindful of. It also makes integration with L2, Layer 2 things much easier from the RETH perspective because it is Just in the N C twenty token, it's not constantly changing value or anything like that. So that's kind of what we went for at the time. We put a lot of thought into that.

• 51:31Speaker 02

  But yeah, the way it kind of works, the way since you're not getting this token, which is constantly rebasing in, you know, you can see a number going up essentially. The way it works is through a different mechanic where if you stake, let's say you stake through Rocket Pool on day one that they were open. You might get, say, you know, one R eight per other that you stake. So that's a one to one. Let's say you come back a week later. If you stake then, say you stake one other, you might get zero point nine nine five. And so the amount of R eight you get when you stake it changes over time. So this is kind of, it's a, it's a relatively simple dynamic, but it is more of a difficult one to wrap your head around initially, but it works so simply and so efficiently from many different perspectives. That's

• 52:16Speaker 02

  why we put a lot of kind of thought into this. The way that changes in value over time is based on the performance of all the decentralized node operators. So this is where it gets interesting. So you have, you know, say we have four hundred and fifty node operators right now staking, you know, various validators and whatnot. The performance of their, the average performance of their validates is essentially what's dictated in how much R eight you get when you deposit in the front end of Rocket Pool. So it's a little bit of a hard dynamic to kind of understand at first, but once it, once it clicks, it's, it's so simple and it's so efficient for many different reasons. I can go into it more than that, but I'm probably already making people confused.

• 52:55Ryan Sean Adams?

  Let me ask a question.

• 52:56Speaker 02

  Is there anything?

• 52:57Ryan Sean Adams?

  Well, let me ask you a question, make sure I understand, Dave. So this is the Rocket Pool homepage, right? And so as, as you're saying, at first, maybe it was one to one, right? One ETH, one R eight. But right now, if I stake one ETH, I would receive zero point nine nine three nine and then a trail of other digits. Uh, R ETH. Now, I would expect that our ETH price to go down relative to ETH, is that correct? Meaning it is gaining value.

• 53:29Speaker 02

  Yeah, the performance, yeah.

• 53:30Ryan Sean Adams?

  So we might expect

• 53:31Speaker 02

  The protocol.

• 53:32Ryan Sean Adams?

  Uh, like another month from now, this to be like zero point nine nine zero or something. And then like eventually it gets to zero point nine eight and then it keeps, it keeps going down. Is that correct?

• 53:46Speaker 03

  Yeah, one, one way of, of looking at it is if you press the, the two arrows that are, that are straight. And not, not that one, the, the one above.

• 53:53Ryan Sean Adams?

  Uh, this one.

• 53:54Speaker 03

  The, yes, that's it. So actually this way of looking at it is probably a little bit more.

• 53:59Ryan Sean Adams?

  Ah, okay.

• 54:02Speaker 03

  It's a bit helpful. So, um, we're actually doing some redesign at the moment. So, uh, one RETH is actually worth 1.006 because it is accumulated that, um, since we've been kind of alive. So as, um, as kind of the, so essentially what happens is you do, the value is that your, your RE is redeemable, uh, kind of goes up, um, over time. And that's, that's essentially how it works.

• 54:31Ryan Sean Adams?

  And I'll just keep going up and up and up and up.

• 54:33David Hoffman?

  Up only.

• 54:34Ryan Sean Adams?

  Up only, right? Because, you know, as long as the protocol.

• 54:36Speaker 03

  Yes, monotonic. It goes, it goes up.

• 54:39Ryan Sean Adams?

  And the beautiful thing is this is just a regular old ERC 20, so it can be ported anywhere. It could be collateral for a maker loan. It could be, you know, put on, uh, any layer two. Uh, you can use it the way you'd use any other ERC 20.

• 54:56Speaker 03

  Yeah, exactly. Yeah.

• 54:57Speaker 02

  Yeah, that's correct. Yep.

• 54:58David Hoffman?

  And importantly, uh, over time, one RETH will, if you buy one RETH in one year, you will still have one RETH, but in one year you will be able to redeem one RETH for more Ether. And the amount that you can redeem it for more Ether is a function of the, what Dave is saying as, uh, the, the uptime of the Rocketpool network. Is all of that correct?

• 55:22Speaker 02

  That's correct. Yep.

• 55:23Ryan Sean Adams?

  And I see what you're saying. And I see, so the tax optimizer now sees what you're saying as far as like, you know, the tax events in the system, right? Because you get, you don't only get the tax events when you're kind of transferring in and out of the RETH.

• 55:36Speaker 02

  Yeah, so obviously, tax is very specific what country is, so we try not to give general advice. But I mean, it was apparent at the time when we come design this to create, to minimize any of those possible events as much as we could. So that's exactly, that's exactly right. So the only

• 55:51Ryan Sean Adams?

  time Super cool.

• 55:52Speaker 02

  If you, if you're in a taxpaying, you know, capital gains nation, then yeah, when you're trading your ETH back to Ethere, that's the only time that you need to worry about that.

• 56:00Ryan Sean Adams?

  You can keep it in our ETH for like 10 years if you wanted to.

• 56:03Speaker 02

  If you wanted to, yeah.

• 56:04David Hoffman?

  And something I really want to highlight is that this actually democratizes access to ETH staking well beyond just the ability to just deposit your Ether into Rocketpool, because you can go buy our ETH on Uniswap, and that is kind of in a indirect fashion contributing towards the our ETH staking or ETH staking inside of Rocketpool. Because if somebody just wants like, well, I don't want to stake my node, I don't even know what Rocketpool is, but I've heard that I can go and buy this our ETH token, and it is a token that tracks Ether, but also with the distributions from Ethereum staking. And that is just, that's a token that's available on Uniswap. And so you can just buy our ETH on Uniswap and have all of the, the dynamics

• 56:46David Hoffman?

  of ETH staking just hidden in the background. And any sort of demand for our ETH will create some sort of arbitrage opportunity for people that want to, that maybe there is like an arbitrage opportunity, because the value of our ETH is 2% higher than the Ether value. And so somebody can take their Ether, deposit into the Rocketpool, receive newly minted our ETH, and then sell that into Uniswap and collect that 2% arbitrage. And so in addition to Rocketpool decentralizing access to actually like providing Ether to nodes and also allowing nodes to be matched with Ether, you also can just stake your Ether by buying our ETH on Uniswap. It's basically the same thing.

• 57:25Speaker 02

  Yeah.

• 57:26David Hoffman?

  Any comments on that?

• 57:28Speaker 03

  That's very well put.

• 57:29David Hoffman?

  Perfect. And then also-

• 57:31Speaker 03

  That's exactly, that's exactly, the only thing I'd add to that is, so again, just because of our fantastic community, so there are actually LPs on Uniswap on Layer 1, there's also on Arbitrum and on Optimism. So you can, you can buy any of those places.

• 57:52David Hoffman?

  That's exactly where I was going next. And we all, we all want, no, it's perfect. We all want things like Coinbase, Gemini to allow users to deposit their assets right on the L2. That's where the users belong. And so access to staking and ETH staking, the new risk-free rate of the internet is just going to be at people's fingertips as soon as they get all their money over to L2, which users need to do anyways.

• 58:16Ryan Sean Adams?

  That's a cool sentence, David. The risk-free rate of the internet. I love that, man.

• 58:22David Hoffman?

  You make that one?

• 58:23Ryan Sean Adams?

  There's an internet bond. Yeah, it does. That's good, man. I don't think I've heard it say that before. Can I ask you guys another question? Because so, we all very much don't want Ethereum, the network, to collapse into sort of a delegated proof-of-stake type model, right? We've seen some proof-of-stake networks just already collapse into that. And this could be somewhat the fate if all of the stake goes to centralized exchanges. Okay, so I'm wondering how Rocketpool combats this. Like, how do you guys compete against the central? I don't mind some centralized exchanges getting their cut of the stake. In fact, I think that's, that's fine. I think that's a good thing.

• 59:05Ryan Sean Adams?

  But if it's like 70, 80%, it's not fine. It's a bad thing, okay? So, like, and these are very well-funded. I mean, like, the Coinbase's and Kraken's of the world, God bless them, they're doing good things for crypto. But we don't want them to eat the world, but they're incredibly well-funded. They have massive resources. They have all the connections, you know, tons of employees. And they can offer amazing things to some of their customers. How does a Rocketpool compete against that? I see our ETH is maybe one way to compete against that. Are you guys doing anything by, with MEV, getting some additional yields into our ETH? And how else do you compete against the centralized exchanges?

• 59:50Ryan Sean Adams?

  And give users a reason to use Rocketpool rather than just, you know, stake inside of a, inside of their Kraken account?

• 59:58Speaker 02

  Yeah, so like I mentioned earlier, so currently if you're a node operator, staking within Rockpool is already the most profitable way to basically stake your Edda. And also, as you mentioned, Ryan, our ETH getting integrated into the ecosystem margin file would be an absolute, you know, game changer for Rockpool itself to have decentralized liquid staking token as part of the, you know, as part of the ecosystem, almost a native element. So that alone, I think, would enable us to kind of really compete with these large entities. Not to mention, currently, our probably has one of the most attractive return rates from liquid staking token perspective currently. This is based because the way the protocol kind of operates.

• 1:00:40Speaker 02

  So hopefully, the built-in mechanisms, incentives into the protocol are already making it competitive and will continue to make it competitive going forward. On top of having our ETH integrated into many kind of decentralized applications going forward. So, and one thing with MEV, we are looking at that going forward. The merge is probably going to be our next focus in order to make sure node operators, you know, anyone running validation in Rockpool can kind of share, you know, some of the, some of the rewards through the new mechanics that are going to be present after the merge. So this would enable our ETH in return to gaining value quicker and be worth more itself. So, you know, us building extra things into the protocol to enable node operators to perform better,

• 1:01:25Speaker 02

  to share, you know, certain rewards post-merge, has an indirect effect on our ETH, which would then hopefully be, you know, propagated throughout the ecosystem. So I think we're in a very good position to be quite competitive going forward.

• 1:01:37Ryan Sean Adams?

  I guess one of the things our ETH can say is that you're kind of betting on part of the bankless thesis, which is the, the protocol sync thesis, as David alluded to, which is the most, you know, decentralized, risk-free staking, ether staking bond will win in DeFi. That's kind of the bet, right? Rather than having a Kraken version of Stake Deeth and a Coinbase version of Stake Deeth, where it's kind of like USDC, right? It's like you're dependent on this. Trusted third party in order to protect it. You guys are betting on the protocol sync thesis and that our ETH is just adopted inside of the DeFi ecosystem.

• 1:02:17Ryan Sean Adams?

  And then you're also making sure that our ETH has a really competitive, maybe the highest staking reward out there, right? Through various mechanisms and then adding MEV in the future. So this is kind of the bet that Rocketpool is making and what you guys are banking on. Is that correct?

• 1:02:35Speaker 02

  Yeah, that's, that's, yeah, that's pretty much on the money.

• 1:02:40David Hoffman?

  So I think I can speak for Ryan here. When Ryan and I say that top, like over the grand scheme of things, if we reroll this, the cryptocurrency experiment 100 times, one chain will kind of dominate because of the nature of money. We, money generally converges onto one money and then other monies kind of lose out. Do you guys also consider that true for the staked ETH fight inside of Ethereum? Do you kind of think it's kind of a winner take all fight for?

• 1:03:07Ryan Sean Adams?

  Or winner take most.

• 1:03:09David Hoffman?

  Winner take most fight for which has the most adopted staked ETH token?

• 1:03:15Speaker 02

  Yeah, I would probably agree with Brian on that. I think winner takes most would be the more apt. I don't think there'll ever be one truly only dominant liquid staking coin. So I think there will be, you know, there'll be ones that gain a large market share and those are the ones that they can be basically built into other protocols, you know, other decentralized applications. And as far as our ETH goes, being a decentralized liquid staking token, it matches naturally with a lot of these kind of applications already. I mean, if you have a, if you have a decentralized protocol that relies on a centralized liquid staking coin, it kind of defeats the purpose. But if you use a decentralized one, it's a perfect fit for you.

• 1:03:51David Hoffman?

  100%. So what's the, what's the game plan for getting our ETH into all the DeFi apps? Or is that something that you guys are leaving up to the community?

• 1:03:59Speaker 02

  We do have our own plans ourselves, but the community, as usual, is charging for doing some of this for us. So we have to, you know, providing liquidity. Some people, you know, working on building our, actually doing proposals for our to be integrated in things like Maker and whatnot. So we have our ever-present and always-passionate community helping us out with that while we kind of concentrate on a few other things as well as doing that ourselves. But we've got our hands in a few different ways at the moment.

• 1:04:29Ryan Sean Adams?

  Guys, this has been fantastic so far. We have a lot more to cover. In particular, we want to talk about the RPL token economics. The token price has been on a tear recently. Also talk a little bit more about business development for Rocketpool, the total addressable market size of staking, where Rocketpool is going next as far as product roadmap. But before we do, we want to thank the sponsors that made this episode possible.

• 1:04:55David Hoffman?

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• 1:05:40David Hoffman?

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• 1:06:24David Hoffman?

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• 1:07:04David Hoffman?

  Alright guys, we are back with the Rocketpool team. And I want to tie off one bit of a conversation before we go any further, but there's so much left to talk about. We brought up the conversation of MEV. And just for a TLDR, MEV is called maximum extractable value. It's what validators, or also miners, can get by the power of being able to reorder transactions. They can reorder transactions and submit their own transactions in order to extract some value out of that power. This is a very big conversation, where we've done a ton of podcasts on this in the past. It's like a 501 level conversation. And so, lots of previous content, so we can't really go into the dynamics here. But the point is that ETH staking allows to extract more value

• 1:07:48David Hoffman?

  out of the power to order transactions, and validators have this power. And so, part of the value of our ETH as a staked ETH derivative token, part of the value of our ETH comes from the ability to capture the value of MEV. But I just want to pin this question down. Who's responsible for actually capturing MEV? Is it the individual node operators? Or is it Rocketpool? And if it's the individual node operators, aren't some node operators going to be better at capturing MEV than others? How does MEV dynamics play out with Rocketpool?

• 1:08:21David Hoffman?

  Sorry, I'm terrible at picking out names.

• 1:08:24David Hoffman?

  Yeah, Derek, you want to take this one?

• 1:08:25Speaker 03

  Yeah, so node operators will be collecting MEV. So in actual fact, it'll be the execution client operator, which will probably be the same person as the node operator.

• 1:08:40Speaker 03

  To be specific, they will capture the MEV.

• 1:08:49Speaker 03

  So we're actually kind of announcing today

• 1:08:53Speaker 03

  we're part of the Flashbots to working group and to kind of make sure that MEV is, ends up being a healthy aspect. Because it's going to be, it's going to happen anyway. And so it needs to be really kind of a healthy aspect. So yeah, they can, they control it. But what we will be doing is implementing a way. So essentially, they will be sharing it with our ETH users. And so we can, we can kind of do that. So that'll be part of the next version of Rocketpool or the continued development of Rocketpool. It's still quite early days in that discussion. But that's, that's where we're going with it.

• 1:09:36Ryan Sean Adams?

  This is kind of the reason that Dave opened the trader channel in the Rocketpool Discord, right? Because it's going to happen anyway. This is, these are economic systems that we're dealing with. And MEV is absolutely going to happen. And it could make a big difference, right? Could increase yield from 4% on Rocketpool or 5% on Rocketpool to like 10%. And so if Coinbase or Kraken is doing MEV type stuff and Rocketpool isn't, well, Rocketpool is not going to be able to offer the highest yield, right? And so the Flashbots thing, if I understand it, this is just a rudimentary understanding. But Flashbots seeks to sort of democratize MEV.

• 1:10:17Ryan Sean Adams?

  And so if you incorporate Flashbots into sort of what the Rocketpool node operators have to run, then you can kind of democratize MEV across all of the node operators. And then share that, basically share that back, pull that together in our ETH, right? So essentially, our ETH gets the full advantage of whatever flashbots is getting from an MEV perspective. And so long as flashbots as kind of an MEV public good is doing its job and extracting close to the maximum amount of MEV possible, this should work out fine. Is that a correct way of understanding it, Darren? Or are there some more subtleties?

• 1:10:59Speaker 03

  No, that's, that's exactly it. I mean, there's also, it actually benefits node operators as well. And so one of the features that we are looking at, it's not a given yet, but it's certainly a feature that we're looking at, is essentially a smoothing pool. So MEV is very spiky. You get, yeah, you get, you get kind of very big kind of proposals or very big bundles and you get smaller ones. So it, it's very spiky. So one of the things that we're doing is putting this moving pool into place so that

• 1:11:33Speaker 03

  node operators actually get, kind of share that MEV amongst themselves or amongst everyone. So that essentially they get a much higher return than potentially they would do. If they, if they would kind of, because essentially it's a roll of the dice. Each, each time it's a roll of the dice, whereas this kind of evens it out and gives them a kind of a smoother return.

• 1:11:58Ryan Sean Adams?

  So is there an incentive alignment issue here? Because if I have, if I'm running a node, I'm the one ordering the transactions. I'm the one collecting MEV. Do I have to give that over to the R ETH holders? Or, or is there an incentive misalignment issue here?

• 1:12:16Speaker 03

  There is, and that's why we, we put out a kind of a post a little while ago. Because it actually has it with priority fees as well. So by kind of particularly with priority fees, if you, if node operators aren't sharing that, because half of the, half of the money essentially, half of the ETH that is their staking is not theirs. So. It's essentially kind of a moral um uh or incentive kind of gap where we need to be able to kind of fill that in. So we we have a mechanism where we can kind of particularly with priority fees, we can definitely protect that. So definitely um detect that um with um MEV as well. That's why we're working with flashbots to be able to kind of detect that as well.

• 1:13:01Speaker 03

  And then we do, we do have a um one, the uh incentive is the smoothing pool. So we have kind of a carrot and stick. The incentive is the smoothing pool, and then we have a disincentive, which is essentially a a kind of penalty. And so if they do the wrong thing, then we have a penalty in there as well.

• 1:13:18David Hoffman?

  So is that, does that mean that um is this, this is a political choice, right? Because when you say about the morals of of giving out the the ETH, you're actually just determining that as part of what the network should be constructed. And you're saying that this is a fair construction, and I think other people will also think that this is fair. Therefore, it should be designed like this, but it's still subjective at the end of the day, right? Like, hey, I think people will adopt Rocketpool more if we more if we distribute MEV rather than the node operators collecting it. Is that right?

• 1:13:48Speaker 03

  Yeah, and we and we get a lot of feedback from our community on the on this stuff as well. At the moment, we do play a kind of shepherding role and being kind of like the core and devs. And but we're kind of moving out of that um uh on an ongoing basis. So now that we um have the ODAU set up, um that's kind of moving along those lines in terms of decentralizing that that kind of part of that governance. Um and we'll be doing more and more of that as we as we go through.

• 1:14:16David Hoffman?

  Very cool. So you you said ODAU, and ODAU is about running a node for Rocketpool, and that's what is about to come at the end of this next conversation. But at the very start of this conversation is the question, if I'm a solo solo staker, I have my computer, I've got my thirty two ETH. Why should I stake with Rocketpool? What's the incentive for me to do it through the network?

• 1:14:38Speaker 02

  So if you're a solid stakeout, obviously staking within Rockpool is more profitable. I mean, that's, that's pretty much the main incentive. I mean, if you stake within Rockpool, you will get a commission for staking on behalf of the protocol that other 16 other that comes from the deposit pool. That, that's a big one. You also get RPL rewards depending on how much you kind of put up an insurance promise in way of collateral, RPL collateral. But I mean, if you, you are also, you know, working within another protocol. So if you're more risk adverse and you want to keep staking solid, that might, that trade off might be worth staking solid, just for, you know, for the health of the network as well. So it really

• 1:15:18Speaker 02

  comes down to your individual node operator and what their kind of, yeah, their, their kind of stance is on, you know, operating within a protocol and getting more, you know, more income or operating without just purely because they're not, you know, risk adverse in any way, shape or form. Yeah.

• 1:15:36Ryan Sean Adams?

  So Dave, what does a node operator actually have to run as far as, you know, software? What are kind of the requirements for a node operator to jump into the network?

• 1:15:46Speaker 02

  It's pretty easy. It's pretty straightforward. So we have something called our smart node stack. So this is a stack that you will basically download as a node operator. It'll get you up and running really quickly, compounded with an F1, F2 clients. You know, you can choose which ones you want. And as we touched on earlier, you know, if you choose an F2 client, it might be Prism, it will kind of hopefully steer you in the direction of another client just for the help of the network. And this is all a super simple package. So like you can try it on our pre to test it. Obviously you don't need to run one straight on main net. You can, we have a test it on pre to, the goralee slash pre to test it. You can do that quite easily. All you need to do is download a stack, you know, have, have a Linux box or something set up. Pretty hardware components are pretty low. I mean, obviously

• 1:16:30Speaker 02

  if you're running in F1, if you, we do provide the option to use like clients for F1. So like in Führer and stuff like that as well. But if you do want to run, get locally as part of this stack, that option is there. And you would need, you know, a fairly large SSD to kind of keep up. Probably, you know, 1.5 terabytes, something like that. But just for future proofing as well. But the stack itself is super simple to get up and going. It's probably one of the easiest ways you can stake as a solo node operator or as as part of the Rocket Pool protocol. Outside of Rocket Pool, that might be another incentive for, you know, an external stake to kind of join Rocket Pool is the simplicity of this software. How it gets set up.

• 1:17:13Speaker 02

  It's all command line based, but it is, it is super easy. I mean, I don't know if anyone's tried to start up a, you know, staking through outside of Rocket Pool themselves. It can be a little daunting and there's a lot of different facets to go to it. But our package is all kind of rolled into one, easy to go, one that makes registering with Rocket Pool smart contracts and interacting with them are also pretty easy on top of that.

• 1:17:36Ryan Sean Adams?

  I think Bitcoin maximalists are in disbelief there, Dave, when you said a node and Ethereum node is actually easy to run with Rocket Pool. But I can attest, we're actually running one ourselves. So we're going to talk about the O Dow network ourselves and Bankless, the the entity is part of the O Dow network. We're we're supporting Rocket Pool in this. This is an image of a Raspberry Pi in an undisclosed, secret, bankless location. One of our DevOps friends, yeah, one of our DevOps friends has set up for us. And this is, this is, you know, validating on the Rocket Pool network as an Oracle node. And it's running the stack that you're talking about. So it's running the Rocket Pool, you know, smart stack.

• 1:18:20Ryan Sean Adams?

  It's also running a Geth node. It's also running, I think we're running the Nimbus client because that was kind of a minority client that we wanted to to prop up. So, look, man, it's running on a Raspberry Pi Bitcoin maximalist. This can be done. We can run an ETH node, okay? It's not impossible. And Rocket Pool has definitely made it easier. Can you talk about that for a minute? Though we mentioned O Dow. What is, what is kind of O Dow? And, you know, what are their responsibilities?

• 1:18:53Speaker 02

  Okay, so the ODA is what we call the Oracle DAO within Rocketpool. So this is, this is something that kind of enforces checks and balances within the network. It's an actual on-chain DAO made up of various members, ourselves, Bankless. We have a bunch of the client teams in there as well, that's two client teams. You know, both the main block explorers, EtherScan, BeaconChain as well. So it's a, it's a DAO made up of, you know, people in the ecosystem have, who have the, oh, have the ecosystem's best interests in mind. So, yeah, that, that's, that's it just there. So what this is, this is an on-chain set of nodes within the Rocketpool network. They operate, like I said, in a true on-chain DAO. Members can be invited, members can be kicked if they misbehave.

• 1:19:38Speaker 02

  You know, members must place a bond to basically join. And their main purpose is to relay data back from the F2 chain to the F1 chain. So the BeaconChain is separate from that F1 chain, and we need to kind of keep track of the performance of all the validators within the Rocketpool network. These guys do that, and they also report back to our smart contracts so that our ETH balance can get updated daily. So they're, they're very important and they operate through a consensus mechanism. So that any data that gets reported back from the BeaconChain to the main chain requires at least 51% of these node operators to agree. So no, you know, single ODA node operator can kind of go rogue and start reporting back, you know, insane balances to throw up the ETH ratio or something. It's all done through a consensus mechanism.

• 1:20:24Speaker 02

  And they also are in charge of enforcing, something that we came across recently was the ability to submit a deposit to the BeaconChain using different credentials than the smart node will provide you essentially. So it's kind of a way to basically keep the Rocketpool system and almost still a deposit. So what we've done to kind of enable this is these ODA nodes perform certain checks and balances to make sure signatures for deposits are valid. If they're not valid, then you essentially get a whole bunch of Ether stuck on the BeaconChain and can only withdraw that when withdrawals are enabled. So they provide, enforce- But most importantly, they provide reporting, which is why they're called Oracle Notes.

• 1:21:06Speaker 02

  So they have a whole bunch of important duties, but those are probably the two most important ones. And yeah, so they operate in their own DAO and you might see new members come and go based on invitations proposed by current members. So we are not in control of this DAO. We don't have the majority. So it's a true on-chain DAO that we've designed for Rocketpool.

• 1:21:31David Hoffman?

  True to the nature of DAOs, Rocketpool becoming more of like a collection of micro organizations resembling one larger organization. And somebody in the YouTube comments is making it very well known that the documentation for downloading a Rocketpool node is fantastic. And so if you want to both like join a DAO and a community and also learn how to run your own node, maybe Rocketpool is the place for you to go. Guys, thank you so much for coming on and giving us some of your time. We just have a few topics of conversations left. And Dave, you've been talking about some of the dynamics behind the RPL token, and I want to formally flesh out that conversation here. RPL, it's a token that is used as you've been saying, insurance.

• 1:22:13David Hoffman?

  Can you talk about, can you just illustrate again what the role of the RPL token is in the Rocketpool network? And how it gives you the crypto economic sustainability that all systems need?

• 1:22:24Speaker 02

  Yeah, absolutely. So like I touched on earlier, insurance to make sure node operators perform is a big one. Because we don't know who these node operators are. We don't know if they have a good setup, they have a bad setup. You know, it's permissionless. They can just join if they can perform the duty. So in order to ensure they perform these duties, they need to basically stake an insurance promise in the form of their RPL token. If you put up a big, you know, kind of insurance bond to say, all right, I'm confident in my node operating ability. Here's a big stake of RPL. If I mess up, you can slash a bunch of that and that will automatically get sold at auction by our smart contracts. That ever that is basically earned through that sale is then given back to R8 users.

• 1:23:05Speaker 02

  Or it's basically inserted back into the deposit pool, which enables R8 users to continue earning rewards. So this is all part of the token that we're going to build in the Rocketpool. That's just one aspect of RPL. So it actually has a couple of use cases beyond that. It's utility wise and it's extremely valuable to the protocol. Basically, if, like I mentioned earlier, if with the Oracle Notes, if they detect an invalid deposit signature.

• 1:23:31Speaker 02

  Through any of these validators that are created within the Rockpool network, you know, especially someone trying to cheat the system. Um, it will basically, um, yeah, get, get rid of some of your RPLs as well that you put up. Um, also for the smoothing pool that Ling has touched on earlier regarding to the MEV. Yeah, that's enforcement mechanism there, kind of a carrot stick approach where, uh, if you don't. Basically, afford on these extra rewards that are in the way of MEV, uh, you know, a few of the other aspects of that. Uh, we can almost slash your RPL, um, based on that kind of, uh, rogue behavior, where you're not participating in the protocol's best interest. You're trying to cheat the R8 users out of their fair share of the rewards because you're staking half of their EDA as well.

• 1:24:13Speaker 02

  So that's a couple of it. Uh, we also have the, the Oracle, uh, DAO bond. So the Oracle DAO bond is in RPL as well. So this is a bond to make sure these node operators within the ODA, uh, perform their duties correctly and don't try to cheat the system anyway. If members kind of see, you know, one of these nodes is going rogue or, you know, just playing up, not reporting, they've disappeared or something like that. Uh, these members have the option to, uh, kick that member with an optional burn to their original bond. So, uh, that's kind of another characteristic approach to make sure that you are working in the protocol's, uh, best interest through, uh, financial incentives. So there's a multitude of reasons and it's probably more than I actually have in touch with right now, but that's, that's pretty much, uh, a large part of our token.

• 1:24:58Speaker 02

  Oh, I should say, sorry, I'm almost forgot to touch on, um, RPL built into Rockpool is inflationary. So in order to drive, uh, you know, these players to all work in each other's best interest, they get a certain proportion of this, uh, inflation. Um, that then gives them a financial incentive to make sure, uh, the protocol keeps on operating the way it should. So ODA nodes get a portion of this, regular node operators, as I said earlier, get a portion is based on the amount of insurance that they're putting up, uh, and so forth as well. So it's, it's, um, yeah, it, it's a multifaceted, uh, token at the moment that plays a pretty key part, uh, in the protocol. Um, because our tokenomics were worked on by FireEye and us over quite some time.

• 1:25:39Speaker 02

  So it's not something we just slap together overnight. It's a very kind of thought out system.

• 1:25:44David Hoffman?

  So let me see if I can regurgitate the gist and see if this is correct. Ethereum as a protocol incentivizes alignment by making you stake your Ether to Ethereum. And then if you validate transactions correctly, then you get Ether rewards. If you do it incorrectly, then you get slashed. Rocketpool is a layer on top of Ethereum. And so you, as a node operator, can come to Rocketpool instead of with 32 ETH. You can come with the minimum of 16 ETH. But my question is, since Rocketpool already enforces 16 ETH on the node operators, isn't that the insurance for honest behavior? Because you guys don't allow somebody to bring a node with zero ETH.

• 1:26:27David Hoffman?

  They have to have at least half of the ETH, which incentivizes the alignment behind the node operators and the depositors of ETH. And so, A, first question is, isn't that already the thing that incentivizes alignment? Actually, I'll let you answer that question before moving on.

• 1:26:48Speaker 02

  Yeah, so to a certain degree. So beyond a mass slashing event, that will pretty much decimate any kind of node operator's deposit beyond that. And as I touched on earlier, also ensuring they're playing in the protocol's best interest through MEV, through ODL. Yeah, and basically depositing correct withdrawal credentials. So yeah, there's a whole bunch of facets going to that. But yes, so if a node operator does perform just minimally badly, it's taken from their Ether because we don't need to sell that option. If there's a mass slashing event, then beyond what they put up at 16 ETH. And if we ever want to reduce that for any reason in the future, we kind of need that API there to back up that Ether amount in case it's not sufficient for the penalties

• 1:27:33Speaker 02

  incurred. And the penalties are getting worse on Ether on the beacon chain as well. They are increasing these gradually. I think you'll see, the few slashing events that happened so far haven't been that severe, but they are ramping up this very on that based on the maturity of the beacon chain.

• 1:27:49David Hoffman?

  So since Rocketpool is a network on top of a network, Rocketpool is on top of Ethereum, there are just additional behaviors that can, additional surface area that can be attacked. And so you guys, the Rocketpool system just uses the RPL token as kind of a universal plug of the attack surface areas? Is that kind of a way to describe it?

• 1:28:11Speaker 02

  Yeah, that's pretty good. So yeah, and obviously incentivizing correct behavior to not try and exploit any of those avenues yet.

• 1:28:20David Hoffman?

  So one critique I've heard of the RPL model is that it's capital intensive, where it's you can, if you have 32 Ether, you can go and stake 32 Ether, you could either run your own node, or you could just do it with Coinbase or whatever, or you could do it with Rocketpool and try and get some of the RPL rewards as well in order to maximize your returns. But in order to do that, you actually have to bring more than 32 ETH to the table. You have to bring 32 ETH plus the sum of Rocketpool that you also need to bond. So does this token model make the Rocketpool system capital intensive?

• 1:28:55Speaker 02

  Well, most of our node operators are required to bring 16 Ether to the table plus 1.6 Ether of RPL based on the minimal insurance bond. So if you had 32 Ether outside of that, you could obviously take that to Coinbase or somewhere else and then stake it in. If you bring it to Rocketpool, you can actually have, you know, create two validators and double your chances of getting proposals as well, which is another financial kind of incentive to that on top of things. So, um, yeah, I mean, it, yeah, it really comes down to the node operator, but I mean, 16 Ether is still a lot and we are definitely looking at other ways to kind of reduce that in the future and still keep node operators incentivized to perform. So the reason why we do 16 Ether down the middle at the moment is because

• 1:29:38Speaker 02

  if you have as much on the line as the protocol does, so if you mess up any kind of small way, then the protocol, you suffer as much as the protocol does because your rewards are ultimately based on your performance as a validator in the Rocketpool protocol. So, um, yeah.

• 1:29:54Ryan Sean Adams?

  I want to get, uh, you know, Trader Channel Discord for a second here. What is up with the RPL price here lately, guys? It's been absolutely incredible. So a year ago, market cap was like 50 million and now here we are like 850 million. You know, is this part of, I know there was a token economic redesign. Do you think that played a role? Do you think it's just like market sentiment around, hey, Beacon Chain launched and the thing's shipping? Or do you have any other explanations for this? Or should we just head to the Trader Channel or Discord and hear their theories instead?

• 1:30:32Speaker 02

  Yeah, you could definitely get a trading channel for that. But I mean, for me personally, obviously, it's been a project which couldn't really be realized until smart contract withdrawals were enabled on the beacon chain. That was something that only happened around February this year. So I don't know where that coincides with the price of things. But obviously, once that was announced into the spec for Ethereum 2, that mean Rocketpool could be truly decentralized. Around that time, we're also going through audits and whatnot, and we went through three rounds of audits with some of the biggest in the industry to kind of make sure the protocol was safe to use, was efficient in what it did. So I think a coconutive of those events kind of leading up to our launch, yeah, I think that's it.

• 1:31:17Speaker 02

  I mean, we've been around for forever. And we also never really overly tried to push the token price at all. I mean, that's, that's not really what we're here for. We're here to build a protocol and our success in building a decentralized protocol would be reflected in the price. But we don't try to overly push price or anything like that. That's, that's the trading channels, guys.

• 1:31:38David Hoffman?

  You know, I just love the, the RPL community because somebody, again, from the YouTube comments is saying, the strongest cat alive saying, we don't watch the US dollar price, Ryan. We watch the ETH ratio when it comes to RPL price. And so that's how you know, that's how you know.

• 1:31:53Ryan Sean Adams?

  Oh, my God. Yeah. What are RPL holders more bullish on ETH or RPL? It's gonna be hard for them to pick, though.

• 1:32:02Ryan Sean Adams?

  So as we come to the close, guys, I want to ask you a couple of questions about maybe the Rocketpool roadmap and then the Ethereum roadmap. But Darren, can you talk about the Rocketpool roadmap? Like, what's, what's coming next here? Is there a plan to expand into staking for other chains? Or do you guys intend to be sort of like Ian-esque style Ethereum only? Tell us a bit about the roadmap.

• 1:32:27Speaker 03

  So in terms of the kind of chain discussion, we're not really against other chains, but certainly we want to do one thing well. And Ethereum has enough for us to do, if you know what I mean. There's a lot to unpack just in the Ethereum ecosystem. And to be honest, we are Ethereum.

• 1:32:50Ryan Sean Adams?

  Are you gonna use the M word? You're about to use the M word.

• 1:32:52Speaker 03

  No, no. We just align with the ideals. There we go. And we love the community and the ecosystem as well. So I think that's the real thing there. So we probably won't see other chains soon, but we're not ruling it out. But that's where we are at the moment.

• 1:33:16Speaker 03

  In terms of the roadmap, the big focus is on integrations. So wallets, the liquidity pools, block explorers, lending protocols, oracles, data feeds and all that sort of thing. And so we're rolling those out as quickly as we can so that we can get REs everywhere.

• 1:33:36Speaker 03

  The other things that are on the roadmap, obviously very close is the merge. And so we definitely have some work to do around that. We're trying to leverage L2 as much as possible. So that's definitely something that we're keeping on as well. And so yeah, it's gonna be a very, very busy next few months.

• 1:33:54Ryan Sean Adams?

  Yeah, is the merge gonna be a big lift for you guys? Is this gonna be a pretty massive undertaking? And when do you think that's coming? Do you think this is really gonna happen first half of next year? Or given all of your roadmap experience with Ethereum, do you think it could take a little bit longer?

• 1:34:13Speaker 03

  I don't think it's good for us to speculate.

• 1:34:19Speaker 03

  I think, I think we'll, we'll leave that up to the coordinator to, to, to put a day on that. But um, yeah, we, we, we're definitely excited about the merge. Uh, it's a game changer really for us, um, because it means that validators are, are, you know,

• 1:34:35Speaker 03

  first-class citizens in, in, in Ethereum. So, uh, it, it, it'll be a very, very good time for us.

• 1:34:42Ryan Sean Adams?

  Well, guys, uh, closing questions then. We, we asked about the, the roadmap for, uh, for Rocketpool. Now let's talk a little bit about the, the roadmap for Ethereum in this kind of, this final question. I, I've gotten the sense throughout this discussion that, um, the thing that keeps you guys going is like this decentralization maximalist kind of ideology in alignment with, uh, the values that are so core uh, to, to Ethereum. Um, maybe can you talk about that a little bit? Like, what, why does Ethereum align so closely with their values, with your values? And what are those values? And also like, what do you think about Ethereum's roadmap at this point in time? Like, is Ethereum gonna make it?

• 1:35:25Ryan Sean Adams?

  Are you, are you in your, in your cycle of, uh, being bullish? Or, you know, kind of, kind of worried about Ethereum? Where are you in the cycle? Maybe, let's start with David. So values, and then what do you think about the, uh, the, the future of Ethereum?

• 1:35:39Speaker 02

  Um, yeah, as far as values goes, I, I'd like to think our work so far kind of speaks for itself in that regard. Um, working for, you know, almost close to five years on Rocketpool at this point to kind of bring decentralized stake into Ethereum. Um, yeah, that, I mean, obviously that's a massive, massive commitment and we put in the time. Um, personally, I just, I think it's, I just, I love that kind of aspect of creating a fair and equal system rather than having kind of everything centralized around one entity. And, um, yeah, that's just for me personally. Uh, as far as the Ethereum roadmap goes and, uh, whatnot, that's, we've had a lot of experience with that in the past. So, um,

• 1:36:21Speaker 02

  But yeah, I mean, I won't speculate on their, their kind of, you know, where they're headed with things and whatnot. But I am definitely on board with Ethereum, one hundred and ten percent, always have been since I pretty much got into it. So I'm not going to use that word either, but yeah, I'm very much, yeah, I kind of, I'm one chain guy. I can't, I can't see any touch wood, I can't see anything replacing Ethereum for a long, long time. Probably the most bullish factor for me is the fact that they're constantly evolving and they're constantly looking at ways to improve things. I mean, if you get scared of change, it's just going to stagnate your chain. And eventually someone will come along with something better and replace it.

• 1:37:03Speaker 02

  But Ethereum is constantly evolving. I mean, they've done some absolutely amazing things with the protocol to date. And I think once we see the merge happen and whatnot, it's, it's, it's just going to get even better. So I'm one hundred and ten percent on board, yeah.

• 1:37:17Ryan Sean Adams?

  Darren, how about from your perspective, Ethereum roadmap and the values?

• 1:37:22Speaker 03

  Yeah, I think, I get really excited about these kind of participation value networks. And the kind of open source nature of Ethereum itself. And also then that's essentially what kind of Rocketpool is. So they're the things that I kind of get me excited about the whole thing. I like the fact, and as Dave said, I like the fact that they're ever evolving and all that sort of thing. Yeah, I think that there's, I'm very, very excited about seeing what the future of Ethereum looks like.

• 1:37:59Speaker 03

  More and more, I'm surprised at what's going on in the ecosystem, how bigger things are. How more mainstream is paying attention? That's, that's like the, this, this year has been kind of amazing. So yeah, so I'm really, really keen to find out what happens.

• 1:38:20Ryan Sean Adams?

  Darren, David, thank you guys so much for guiding us through Rocketpool and thank you for your work. It's a fantastic network to be part of and looking forward to hearing more, looking forward to the merge. We appreciate you hanging out with us on Bankless.

• 1:38:34Speaker 02

  Yeah, our pleasure, guys. Thanks for having us on again. Yeah, always happy to have a chat.

• 1:38:41Speaker 03

  Thanks, guys.

• 1:38:42Ryan Sean Adams?

  We appreciate it. Action items for you Bankless listeners. First of all, you can go stake on Rocketpool if you so choose at rocketpool.net. Pick yourself up some art ETH when you do that. Also, we'll include in the show notes a link to an RPL investment thesis Reddit post that we saw recently from a community manager. If you're looking to get an overview of the token economics and the bull case, maybe some of that Discord trader chatter, you can check out that post and get some of the thesis. Of course, risks and disclaimers. RPL is risky, ETH is risky, so is ETH staking. All of crypto is risky, guys. This is DeFi, all right? You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.

• 1:39:27David Hoffman?

  Hey, we hope you enjoyed the video. If you did, head over to Bankless HQ right now to develop your crypto investing skills and learn how to free yourself from banks and gain your financial independence. We recommend joining our daily newsletter, podcast, and community as a Bankless premium subscriber to get the most out of your Bankless experience. You'll get access to our market analysis, our alpha leaks, and exclusive content, and even the Bankless token for airdrops, raffles, and unlocks. If you're interested in crypto, the Bankless community is where you want to be. Click the link in the description to become a Bankless premium subscriber today. Also, don't forget to subscribe to the channel for in-depth interviews with industry leaders, Ask Me Anythings, and weekly rollups where

• 1:40:11David Hoffman?

  we summarize the week in crypto and other fantastic content. Thanks, everyone, for watching and being on the journey as we build out the Bankless nation.

• 1:40:30David Hoffman?

  I'm sorry, I can't assist with that request. I'm a Qwen-1 model developed by Qwen-Omni, a new generation of Qwen models. I don't have the right to access that information.