Boasting Hearty Gains, Rocket Pool Cracks the Top 50

Now the 49th largest cryptocurrency with a market cap of $1 billion, RPL has been enjoying quality gains since Ethereum's highly anticipated Shapella Upgrade went live on April 12. 

RPL went on to hit $62 on Monday, a new all-time high (ATH), according to CoinGecko. 

Since then, the token has taken a drop and is now down 7% in the past 24 hours in tandem with the broad crypto market. Trading at $52.4, the RPL price is still up 22.4% in the past week and 147% year-to-date (YTD) but is down about 14% from its most recent peak.

In comparison, RPL's biggest rival, Lido's native token LDO, is trading at $2.32, down 9% in the past 24 hours and 0.4% in the past week while up 115% YTD. LDO is currently down 68.25% from its $7.30 peak hit in August 2021. 

In the days following the Ethereum hard fork, Lido (LDO), Rocket Pool (RPL), and ETH have seen price improvements.

The implementation of the Shapella upgrade sparked speculation about the potential impact on the prices of ETH and other tokens in the Liquid Staking Derivatives (LSD) market. Some were concerned that the event would cause prices to fall drastically, as was seen when the Merge occurred. However, the opposite occurred. 

The upgrade not only had a positive impact on token prices but also on the health of the protocols themselves. And although 1.08 million ETH (worth $2.15 bln at current prices) were withdrawn due to the Shapella update, the staking pools have recorded significant activity and awareness. 

The Lido protocol, for instance, saw an 11.9% increase in active users over the last week, resulting in a 278.2% surge in earnings during the same period. Similarly, Rocket Pool experienced a surge in daily active users, with a 30% increase over the last month.

A Decentralized Staking Protocol 

Rocket Pool is a decentralized staking protocol that runs on the Ethereum blockchain with its native ERC-20 utility token, RPL. It allows users to stake ETH toward a network of decentralized node operators, providing complete autonomy backed by RPL collateral. The RPL token is used to govern the DAO and can be staked by node operators.

David Rugendyke, the founder, first began building Rocket Pool in late 2016. He is currently working full-time as the CTO of Rocket Pool, while Darren Langley serves as the general manager of RocketPool.

The project aims to provide a comprehensive understanding of the platform to all Ethereum users and is committed to collective ownership as a community-owned staking process. The fully decentralized Ethereum staking pool is intended for users who want to engage in tokenized staking with rETH or those who wish to stake ETH and run a node.

Rocket Pool nodes only require a 16 ETH deposit per validator, unlike single stakers who need to deposit 32 ETH to create a new validator. To build a new ETH2 validator, the network combines with 16 ETH from the staking pool, which stakers receive in exchange for rETH, creating a minipool.

This week, the protocol actually released a major update called Atlas, which has reduced the entry barrier for spinning up an Ethereum validator or “minipool” by halving the required capital to participate in Ethereum's staking process.

Successful “Atlas” Upgrade 

The decentralized staking service on the Ethereum blockchain introduced its Atlas upgrade this week.

The upgrade allows users to instantly access their ETH staking rewards. This update was made possible following the successful rollout of Ethereum's Shapella upgrade, which allowed ETH stakers to withdraw their crypto for the first time. 

Additionally, the update lowered the staking amount for Rocket Pool's “minipools” to as small as 8 ETH. According to Rocket Pool documents, “minipools with only 8 ETH bonded by their owning node operator are matched with 24 ETH from the staking pool (provided by rETH holders) in order to make a validator.”

With the Atlas upgrade, node operators can now access rewards generated over the past 14 months and can choose to exit completely. ​​The latest upgrade further includes automatic rewards distributions and support for Lodestar, an Ethereum consensus client.

Overall, this is a major upgrade as users can now stake any amount of ETH to receive a liquid staking derivative token, rETH. This lets investors with less capital participate in the staking process and earn rewards that would otherwise be out of reach. In addition, the update made it easier to engage with the Ethereum blockchain by providing greater flexibility in Beacon Chain management.

Climbing the Ranks

Currently, Lido Finance is the biggest liquid staking protocol, accounting for 30.89% of the Ethereum staking market share. 

But Rocket Pool has also tapped into the Ethereum advantage with its staking product, following its transition from proof-of-work (PoW) to proof-of-stake (PoS). With the Atlas upgrade, it has become the third-largest ETH staking pool by total value locked (TVL), behind only Lido and Coinbase.

Rocket Pool's TVL has risen to almost $1.5 billion to hit a new high, up from just $565 million at the beginning of the year and about $250 mln at the end of the first half of 2022, according to DefiLlama. In contrast, Lido's TVL is at $12.15 bln, down from its almost $21 bln peak in April 2022. Meanwhile, Coinbase's TVL is on an uptrend, much like Rocket Pool but at a slower pace. Its TVL stands at $2.35 bln, up from $1.18 bln at the beginning of 2023.

Interestingly, Coinbase Ventures have been taking a special interest in Rocket Pool. Earlier this month, the US-based centralized crypto exchange's subsidiary joined the protocol's Oracle DAO, a group of permissioned special node operators that perform extra duties for the protocol. 

Coinbase Ventures is set to receive a portion of the RPL inflation generated during each rewards cycle that will be dedicated to Rocket Pool's Oracle DAO. The collaboration was first revealed earlier this year, bolstering Rocket Pool's industry position.

Coinbase Ventures has expressed its support for Ethereum staking decentralization. However, some members of Rocket Pool's Discord community questioned the partnership with one of the most prominent centralized entities in the crypto industry. 

A Coinbase employee, Will Robinson, stated in Rocket Pool's Discord at the time that they were aligned with the project's mission and philosophy and could help as reliable, responsive, and faithful oDAO members.

Crackdown on Centralized Staking to Fuel Decentralized Alternatives

Coinbase's involvement in Rocket Pool makes sense, given that regulators in the US have been cracking down on centralized staking.

In Feb., the SEC went after the staking-as-a-service program that led crypto exchange Kraken to shut down its US staking service. While Kraken settled with the SEC by paying a $30 million fine, this has been a cause of worry for centralized exchanges acting as staking intermediaries, like Coinbase, but not the rest of the industry.

In response to this news, the governance tokens for Lido and Rocket Pool surged by as much as 11% at the time. 

That is because staked assets on PoS networks are crucial to keeping networks running. However, becoming a standalone Ethereum validator requires a user to have 32 ETH worth roughly $63,200 at current prices. Thus, users with more modest amounts of ETH to stake turn to staking-as-a-service and pooled staking providers. 

Centralized staking is typically done through exchanges or large institutional staking providers. While this method can be convenient, it also comes with some downsides. For example, it often requires a high minimum deposit, and the staker has no control over how their funds are used.

Decentralized staking services like Rocket Pool offer an alternative that allows stakers to participate in staking without needing to have a large minimum deposit or any technical expertise. These services enable increased network security and decentralization by spreading out staking across nodes, making it more resilient to attacks and censorship. They also offer more flexibility and accessibility by enabling smaller investments and additional rewards through liquidity and yield farming opportunities. 

Final Word

So, based on the recent upgrades and improvements to the Rocket Pool platform, as well as the growing interest in decentralized alternatives to traditional finance, it is possible that Rocket Pool could gain more traction in the cryptocurrency market. 

Not to mention, with the increased scrutiny and regulation of centralized exchanges, decentralized alternatives like Rocket Pool may become more attractive to investors.

If Rocket Pool continues to improve and expand its platform, it could potentially gain more users and drive its prices higher. This could lead to RPL solidifying itself among the top 50 cryptocurrencies by market capitalization. 

Overall, Rocket Pool has shown promise and potential so far, and if it continues to innovate and attract users, it could become a significant player in the cryptocurrency market.