What is RPL in crypto? Review of Rocket Pool (RPL) Potential 2024

Recently, projects in the Liquid Staking Derivatives (LSD) sector have emerged as a new trend in cryptocurrency, attracting significant investment. Rocket Pool (RPL) is known as one of the most prominent projects in this niche. But what exactly is Rocket Pool? What is RPL coin? What advantages does it have over other LSD platforms? Should you invest in RPL coin? Let’s find out more in the article below.

Contents

1 What is RPL in crypto, should you invest?

What is RPL in crypto, should you invest?

What is Rocket Pool (RPL)?

Rocket Pool is a project in the Liquid Staking Derivatives (LSDs) segment. Rocket Pool is the first truly decentralized Ethereum staking pool, allowing users to earn rewards by holding their ETH. With Rocket Pool, users can join a decentralized node network or run their nodes with just 16 ETH.

Currently, to stake ETH on the Ethereum network, you need to have 32 ETH. But 32 ETH is a significant amount, not every investor can afford it. Hence, platforms like Rocket Pool, Lido, BlockFi, and even Binance or Coinbase are finding ways to make ETH staking more accessible. Rocket Pool is such a platform, making it easier for everyone to stake ETH.

With Rocket Pool, users can lock a minimum of 0.01 ETH and receive rETH tokens. rETH is an LSD token, meaning you can use it to participate in another Defi protocol to earn profits, without worrying about capital being locked up.

How does Rocket Pool work?

In general, the functioning of Rocket Pool is similar to most other LSD protocols. Its ecosystem consists of 2 tokens, namely RPL and rETH.

rETH: is the LSD token of the Rocket Pool protocol. rETH represents an equivalent amount of ETH deposited into the Rocket Pool. rETH can be converted back to ETH anytime, provided there’s enough ETH in the pool for user transactions.
RPL: is the governance token of Rocket Pool, and it’s the currency you must buy if you want to invest in this project.

The basic operation of Rocket Pool is simple: You deposit ETH into a staking group on Rocket Pool, in return, you receive rETH tokens. Rocket Pool then stakes the ETH on the Ethereum network. Meanwhile, you can sell, hold, or deposit your rETH into other Defi protocols to earn profits.

Rocket Pool currently offers 2 products:

Staking + Running a Node: Rocket Pool allows users to become validators with a minimum of only 16 ETH staked. The APR for this product at the time of writing is 7.28%. In addition, users also need to stake a certain amount of RPL (the governance token of Rocket Pool) as collateral in case of penalties from the Ethereum network.
Staking ETH: You can stake any amount, starting with just 0.01 ETH, and you’ll be free to withdraw that amount whenever you want! With an extremely simple one-click process, users can deposit ETH and receive rETH (representing the amount of ETH staked on Rocket Pool).

From a revenue perspective, Rocket Pool charges commission fees and deposit fees on rewards paid to Node Operators and Stakers, with the fee structure changing over time as determined by Rocket Pool. Currently, the Deposit Fee is 0.05%.

What’s special about Rocket Pool (RPL)?

You now understand what RPL coin is and how it operates. So, what makes this project stand out from its competitors? Let’s go through its key features:

# In the Rocket Pool protocol, anyone with the necessary amount of ETH and RPL can become a node operator, instead of Rocket Pool selecting a few individuals. This allows Rocket Pool to create a truly decentralized network of node operators worldwide, ensuring fairness.

# Rocket Pool allows users and businesses to run validation nodes for Eth 2.0 with just 16 ETH to earn rewards.

# The withdrawal process for node operators is executed through a smart contract, meaning operators don’t need to rely on the Rocket Pool team or third parties to withdraw their funds.

# rETH holders can stake while maintaining control over their own money and only need to store their rETH in a hardware wallet or another wallet of their choice. They can also swap it back to ETH from their hardware wallet anytime.

# rETH holders keep about 90% of the staking rewards. This is more competitive than centralized platforms, for example, Coinbase charges a 25% staking reward fee (stakers keep 75% of their rewards), and Kraken charges a 15% staking reward fee (stakers keep 85% of their rewards).

# After Ethereum transitions to PoS, the transaction fees will go to the staking validators instead of miners as before, which is expected to significantly increase Ethereum staking APY. Rocket Pool has designed its protocol to fairly distribute these rewards to both “stakers” holding rETH and “node operators”. This makes Rocket Pool quite different from its competitors.

Currently, in the Liquid Staking sector along with Rocket Pool is Lido Finance leading the market. Compared to Lido, Rocket Pool only provides liquid staking solutions on the Ethereum network. Below are some basic details for comparing Rocket Pool and its biggest industry competitor (Data as of 13/2/2023):

About RPL Token

Token Name: RPL Token
Ticker: RPL
Blockchain: Ethereum
Token Standard: ERC-20
Contract: 0xb4efd85c19999d84251304bda99e90b92300bd93
Total Supply: 20,909,795 RPL
Circulating Supply: 30,000,000 RPL

RPL is the governance token of Rocket Pool used for several purposes:

Staking: Users who want to provide security for the network can stake RPL & Node Operators can also stake RPL to earn additional commissions.
Reward Payment: Rocket Pool uses RPL Tokens to reward Node Operators and members of the Oracle DAO and Protocol DAO. Rocket Pool DAO also allows RPL stakers to participate in the DAO to govern activities such as smart contract upgrades or minor system changes.

RPL is allocated as follows:

Team: 15%
Pre-sale: 54%
ICO: 31%

The RPL token inflates by 5% annually (i.e., 75,000 RPL Tokens are created each month). This inflation is used to reward the use cases mentioned above.

The Team, Investors, and Partners of Rocket Pool (RPL)

– Team:

David Rugendyke – Founder & CTO: David has 18 years of experience as a Senior Developer with a background in Computer Science. He started with Rocket Pool in late 2016.
Darren Langley – General Manager: Darren manages and advises all personnel within Rocket Pool.
Maverick (Nick Ashley) – Marketing & Community Manager: Nick has years of experience as an advisor in the blockchain industry.

– Investors: Rocket Pool has conducted a total of 2 funding rounds, Pre-sale and ICO, with the participation of Consensus Capital, a fund investing in new blockchain technologies, and KR1, a European fund specializing in digital assets in the market, along with other prominent investors and VCs such as Kryptonite1 and Milliwalt.

– Partners: The members of the Oracle DAO are projects, media channels, and infrastructure that support Rocket Pool in issues such as node operation, advertising, and management…

– Competitors: Some similar projects in the same field as Rocket Pool include Lido Finance (LIDO), Ankr Protocol (ANKR), StakeWise (SWISE), StarFi (FIS), etc.

– Information/Community Channels:

Twitter: https://twitter.com/Rocket_Pool
Medium: https://medium.com/rocket-pool
Discord: https://discord.com/invite/rocketpool
Community wiki: https://docs.rocketpool.net/overview/

Where Does Rocket Pool (RPL) Stand in the LSD Sector?

Rocket Pool is the third-largest LSD protocol, with nearly 300,000 ETH staked since its inception. Rocket Pool has two clear competitors in the LSD market context with significant traction in the Liquid Staking market:

cbETH (Coinbase): Coinbase’s custodial liquid staking derivative tool represents the most centralized product offering. While Coinbase currently manages over 2 million staked ETH, its LSD offering is a relatively late entry into the market.
stETH (Lido): Lido is clearly the market leader with 4 million ETH staked. It has established market dominance early through operational efficiency and focus on DeFi integration. Lido has cemented its position as a leading LSD partly due to stETH’s integration with DeFi and Lido’s investments in strong DeFi liquidity.

Market share and ranking of current LSD protocols (as of 17/2/2023)

*** You can look up this data yourself at: https://defillama.com/lsd ***

Despite LIDO’s dominance, Rocket Pool is still asserting itself. Rocket Pool focuses heavily on diversifying node operators (validators), and this has been clearly reflected in some key metrics. For example, while Lido holds 29.95% of all validators on the Ethereum network, its entire validator set is operated by only 29 validators. In contrast, Rocket Pool’s validator market share is only 10% of what Lido has, but it has up to 1,647 validators.

Should You Invest in Rocket Pool?

Having learned about Rocket Pool – RPL coin and the general overview of the LSD market, is Rocket Pool (RPL) a potential investment? In my personal opinion, considering what Rocket Pool is aiming for and what it has achieved, it is a very promising project, because:

The low entry barrier to ETH Staking on Rocket Pool has made it one of the most used decentralized staking platforms. Rocket Pool recently recorded reaching $1 billion in locked-in value (TVL) in less than two years since its launch.
Rocket Pool is one of the collaborative protocols in the latest MetaMask staking service launch. Now, users can stake in the MetaMask app using the Rocket Pool protocol.
Rocket Pool is also increasingly gaining attention in the decentralized finance (DeFi) sector. Just in February, Vesper Finance, Silo Finance, Yield Protocol, and Index Coop launched support for Rocket Pool’s rETH token.
Coinbase Ventures has strengthened its partnership with Rocket Pool by investing in the protocol, as well as participating in voting on proposals in oDAO.
With the upcoming successful Shanghai upgrade of Ethereum, LSD projects are expected to benefit from this, and Rocket Pool is no exception. The impact of the Shanghai upgrade is long-term, not just short-term.
With the recent SEC crackdown on staking services on centralized exchanges, such as Kraken, platforms like Rocket Pool are attracting more attention as they serve as an “alternative” to these centralized exchanges.

Risks Faced by Rocket Pool (RPL crypto)

Despite its potential, Rocket Pool faces several existing risks:

Rocket Pool has undergone numerous audits, the most recent being by Sigma Prime. They identified one serious risk and two medium risks within the platform. However, Rocket Pool developers have stated that these issues have been addressed. (You can refer to this audit HERE)
From a market perspective, Rocket Pool still trails behind Lido and Coinbase in terms of market dominance. While Rocket Pool has growth opportunities, so do Coinbase and Lido. Some believe that the more centralized node operator collaboration in MEV (mainly by Lido and Coinbase) could yield more attractive returns, which would pose a significant threat to Rocket Pool’s appeal.
There are risks associated with smart contract vulnerabilities that all DeFi protocols face, including Rocket Pool. However, such occurrences are rare, considering the past history of the DeFi industry.

In summary:

Rocket Pool is currently the third-largest LSD protocol, but the vision of Rocket Pool (RPL) might be higher than this. Investments in Rocket Pool are increasing, and its market share is growing daily. This is enough to see Rocket Pool (RPL) as one of the most prominent names in the LSD field. Therefore, if you believe in the potential of LSD and want to choose a good LSD coin to invest in, RPL might be a good choice.

However, investing in any project requires a sensible plan, finding the right buy/sell price, avoiding FOMO when the price has already risen, and always staying updated with the latest developments in the LSD market. Wishing you wisdom and successful investments.