Earning ETH Yield with Rocket Pool | Darren Langley & Dave Rugendyke

Transcript

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 rocket pool rocket pool david why don't you tell folks what rocket pool is yeah rocket pool is a decentralized staking as a service system uh and rocket pool has been around for a really long time i remember paying attention to rocketpool back during the the ico craze the ico days and racquetball has uh you know just been laser focused on one thing and one thing alone which is providing a decentralized staking pool system to in further democratize and decentralize access to providing security for ethereum so we're going to dive into what that means and this story thus far for rocket pool and but also

most importantly their main net launch which is why we're having them on right now they're mainnet just launched so congratulations to the to the rocket pool community and the rocket pool team and dave and darren who have been through it all all throughout the bear market and then finally went through got to the other side of the bear market waiting for all of the ethereum two devs to actually ship proof of stake uh and now that is finally here rocket pool is following along in the footsteps of ethereum at large 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 on your in your own validator still requires 32 each that's a lot of money man like 32 eth so if you don't have 32

each and you still want to stake the decentralized way rocket pool is providing an answer to that and so uh we're gonna talk to the team today all about it and talk about the wider east staking ecosystem too so we hope you hang out for this conversation it's gonna be great with david and darren from rocket pool before we get in we uh got to tell you about opolas i think this is uh one of the last days that uh we're gonna be talking about this opolis is a dow that supports self um self sovereign workers basically these 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 dowels and they're like i would

quit my corporate job in a heartbeat and go work for a doubt but i can't because i live in the u.s and i need health insurance i need my benefits uh i need like payroll taxes done for me that's what opolis does so it is a dow 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 the bankless podcast you get a thousand work tokens and a thousand bank when you join opolis 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 dow 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 opolis today uh 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 yeah polygon which is uh what we've been calling the swiss army knife of scaling solutions uh there's been a bunch of drama recently about abandoning ethereum because abandoning because ethereum abandoned its users well around here sir the polygon team disagrees uh and so we brought on uh mihalo and sandeep of the polygon team to just 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 layer zero with tim baker tim baiko 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 baiko really uh came onto my radar when he's really pioneered eip1559 so 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 uh 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 well now that is an individual who

works for a dow right ethereum being sort of one of the original dolls for for sure so that'll be an interesting story i haven't caught up with that podcast yet david but it's in my cue uh 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 yeah the state of the nation is sinking which is kind of an interesting word but for long time bankless listeners you might be reminded of the protocol sync thesis which i think it 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 sink 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 rocket pool is really a piece of infrastructure that is at the deepest level of the protocol sync very core to ethereum and when something like rocket pool comes online we all get to go a little bit deeper down the protocol sync so ryan today we are sinking sinking but in a good way this is a thinking that makes our systems more robust and more decentralized and is a core part of the 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

rocket pool story with darren and dave but before we do we want to thank the sponsors that made this episode possible arbitram is an ethereum scaling solution that's going to completely change how we use defy and now it's live with over a hundred projects deployed gas fees on the ethereum l1 sucks too many people want to use ethereum and it doesn't have enough capacity for all of us and that's why teams like arbitrom have been hard at work developing layer two solutions that makes transactions on ethereum cheap and instant arbitrary increases ethereum's throughput by orders of magnitude at a fraction of the cost of what we are used to paying when interacting with arbitrary you can get the performance of a centralized exchange while tapping into ethereum's level of security and decentralization that's why people are calling this

ethereum's broadband moment where we get to add performance onto decentralization and security 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.offchainlabs.com to get started building on arbitrum if you're a user keep an eye out for your favorite defy apps building on arbitrome many defy applications that are on the ethereum layer one are migrating over to layer twos like arbitrary and some are even skipping over layer ones and deploying directly on layer twos there are so many apps coming online to arbitrarily so go to bridge.aubertrum and start bridging over your ether or any of the tokens listed and start having a defy experience that you've always wanted living a bankless life requires taking control early bankless

is proud to be supported by unit swap unit swap is a new paradox using ledger live you can stake your ethan lido swap on dexes like paraswap or display your nfts with rainbow you can also use wallet connect inside of ledger live to connect to all the other defy apps that keep coming online defy never stops growing and the ledger live app grows alongside with it so click the link in the show notes to see all of the defy apps that ledger live has and stay tuned as more apps come online and if you don't have a ledger hardware wallet what are you even waiting for go to ledger.com grab a ledger download ledger live and get all of your defy apps all in one space hey guys welcome back this is our

episode on super staking super staking eth with our friends from rocket pool we have darren who is the general manager at rocket pool also dave who is the cto of rocket pool darren dave great to have you guys back on bank list how's it going i'm good good it's uh great feedback i think last time i had a chat with uh dave it was probably a bit over a year ago now i think so yeah yeah it's crazy the content's already a year old yeah i'm surprised to uh recruit you into david dow yet uh dave as well matter of fact i'm just talking about that previously so oh yeah um i shall be in there in there surely apparently this is over 200 days in there now which is oh my gosh i just set up your shield david

thank you thanks for doing that and how's it going darren no is there a darren dow yet or are you focused on rocket pool still there is there is not a darren dell they might be afraid that's great well it's uh fantastic to have you both on we've been uh wanting to do this for a while particularly post launch um and i know look this has been the year of eat staking massive year i think tomorrow it'll be a year since the beacon chain launched and eat staking was available and i remember a year ago at this time how all of us were very worried about um issues with the beacon chain like with the launch go successfully and then if it does launch would we get the uh the amount of steak

necessary to actually fire up the beacon chain and everyone was worried will we get you know it was like um how much was it 500 000 we were looking for eath staked was sort of the threshold now we are well beyond that okay we have left 500 000 uh behind and i know rocket pool has been a part of the east staking story from from the inceptions and two weeks ago rocket pool 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 going to shout out a few stats in the first two days of operation rocketpool registered 237 node operators across 42 global locations with a

thousand over a thousand each staked that's huge i know it's been more than two days now but i just wanted 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 it 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 a smart contract like over three four years ago so it's gonna get through that get through launch get through the ability for smart contracts to receive withdrawals which was a key part to rockable pool being truly decentralized for if they're into 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 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 like there's been there's been delays we've had you know like if you cannot test that we've had five betas up to this point which is certainly for any project to have um and you know we've been through multiple rounds of audits so um yeah the patrons with our community as well and their supporters kind of be like really driven rockford to get to this kind of successful launch so yeah huge shout out to them and basically everyone else that's kind of wrapped up some backed uh 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 staking so now hopefully we can kind of counter that with a bounce to our current client diversity at the same time daryn you feeling that too are you feeling that energy how's it feeling on your side it's uh it's been a very exciting ride to be honest um uh we would kind of heads down getting the development done and now that the um uh now that the it's actually launched um it's um kind of fantastic actually a little update on the kind of numbers um so we're 25 000 8 at the moment and being staked across um across rocket pool

sorry yeah [Laughter] that's all right i am going to turn that off completely yeah darren you your friend running us on the numbers uh twenty five thousand each staked uh how many noted operators do you have now uh so 450. 450 node operators uh across um 59 global locations and 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 10 days um yeah kind of full board 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 there is we've kind of blown away so it's amazing 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 it could be deposited but now all of those governors are gone uh it's completely open for anyone to uh to stake their eth there's no cap or governor on top of is that correct that's right exactly yeah you have a deposit pool size limit but that's baked into the protocol as a kind of a safety mechanism so uh beyond that that's two thousand others so um yeah if the deposit pool ever kind of gets that

maximum amount and there's no no deal pros coming online then the commission rate for new node operators take that other goes up significantly to kind of incentivize them to come on so that's the only kind of real cap that we have at that moment but it's actually part of the protocol right it's a resource management part of the protocol right mm-hmm exactly exactly so the the more error that's in rockford isn't staking kind of drags down the boards for um r8 users so we can't have too much of that which is what we kind of limit it to 2000 which is a pretty pretty hefty amount but still not so much it will drag down it will like it would add uh idle letter to the to the protocol just something we don't want too much of and uh listeners who are familiar with the

dynamics of each staking might notice that this is actually kind of a fractal off of how each staking works where uh the the more and more ease supply that's applied to the ethereum protocol uh the more total ether is issued but the less ether is issued on a per individual unit basis and rocket pool is managing the supply in a similar way if there is more if if more nodes need to come to rocket pool because the rocket bull has plenty of eath staked more rpl will be issued to nodes to incentivize them to spin up more nodes so it's kind of it's uh creating an equilibrium based off of the the available resources that needed to be added to the rocketpool network that that'll correct yeah that's yeah that's that's pretty close yeah so we have we have um we essentially cater

to two main uh user groups and we have users that want to kind of stake uh doing a liquid staking with the the r8 token this is basically a token that you hold that gains rewards over time based on the average performance of all the validators in the rockpool 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 token the games rewards over time based on the performance of the decentralized network and the other the other half of the audience is obviously the node operators that need to do the staking so these are the guys that are really kind of backbone in the network and they have the most again um by participating in rocketpool so they could stake their own other outside rocket pool but if they

come inside rockpool they also earn a difficult commission and also rpl rewards on top of that to incentivize them to join the protocol and you know kind of help out with decentralized staking so we actually have so much to talk about with we want to talk about our eth because the market for staked east derivative tokens i think is going to be really really big 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 um yeah i can probably start out that so uh back in about mid 2016 um there was a um oh it was kind of on the road map for ethereum that time was you know the proof of stake uh previous stack 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 8 then they kind of realized that scaling involved to have a smart contract kind of dolling 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 was a thousand other per

validator which is by today's standards it would just be absolutely astonishing so um so yeah obviously back then they realized that was a huge issue um i was kind of looking for a project oh i personally i've been in the blockchain scene since about 2013. um and i was you know well aware of ethereum was kind of looking for a project to kind of sync my teeth into learning about smart contracts uh so i was insanely interested in them at time i thought it was absolutely amazing concept um yeah so basically came up with the idea you know such a high amount of error whether it's 32 or a thousand back then you know people would obviously need to kind of combine their other together in order to earn rewards so um yeah i started on prototype of rocketpool way back then based on uh

something called the move paper which is a paper that vitalik put out i think it was in mid to late 2016 and this basically outlined the functions that would be embedded into these early smart contract version proof of stakes that allowed me to kind of write rock and pool to plug into that because we already had a pretty early definition of how the functions would work so anyway fast forward about another nine months after that um i think it was about mid 2017 released the alpha version of rocket pool um from there it got absolutely massively good reception uh on reddit and a few other busy ethereum hubs at the time um yeah and since then we've basically just gone through um we obviously we also did a token uh sale 2017 that uh happened

about three months before the bear market did so we um that was timing-wise that was interesting but we basically got away on a pretty compact team for the next uh year until around 2018 when we released our first beta the same week they announced they were pivoting to the beacon chain so 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 proof of stake uh for ethereum so you could kind of say rocket pool was operating previously a couple of years before it was even available can we just pause there dave for a minute because like i i just want folks who who weren't there in 2018 to to realize this so like i remember this very clearly and

um 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 that like the code was was ready the code is prepped and then i recall uh some kind of meeting of the minds with ethereum core 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 and it totally makes sense uh 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 um well personally i was always a pretty pretty massively into the theorem 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 it was just a pleasure to kind of work in that environment uh at that time though when that did happen i mean that that was a pretty big shock we actually heard rumors uh maybe a week or two before it officially landed uh that that was possibly what was going to happen so that was just a rumor at the time i don't know lang as you you're around then as well when this was kind

of going down um so yeah basically once that happened um we pretty much just had to uh take a really close look at the kind of the new proposed system uh see what elements rockpool would carry over to that one luckily most of the core concepts the way we kind of organize deposits into midi pools which is our version of validator most of that still you know carried over quite quite well obviously we weren't baked into uh you know a layer one uh kind of system as much because now we have to do depend on two different chains chains the beacon chain and the layer one chain uh so that required some a couple of additional fixes but at 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 and you don't really get an official heads up before the main announcement comes out 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 still here so language was actually around then too so i actually want to throw in and i think it's like this yeah well i think once um once the the shock had worn off a little bit uh the realization especially when you and 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 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 it would 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 worth the weight worth the weight and this is why 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 pull 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 it stick out uh and then once once ethereum actually does commit to one specific road map well then now then the rocket pool community can actually actually inject the energy into the finalized you know solidified foundation and so like where like all the ethereum people were like waiting for proof of stake proof of sake although the rocket pool people people were waiting for rocket pool who was waiting for proof of stake right it was just like this uh this fractal of these communities just playing off of each other yeah that's that's very much it so i think that being on the being on the edge is uh is a lot of fun

um as long as you don't fall off too many times um but uh it's it it's definitely fun we're kind of working at that at that bleeding edge and definitely one of a similar um motivations like you know people stuck to ethereum because they believed in ethereum and you guys talked to rocket bull because you believe in rocket pool but let's back up and just articulate for the listeners why why it was so obvious that something like rocket pool would need to be built so early in ethereum's lifespan like like dave you're you're looking at ethereum you know it's committed to proof of stake and all of a sudden you realize that like oh these this thing called a decentralized staking pool must need to exist at some point in time why did you know that that was true what and what is the rocket pool vision

um so basically at the time um yeah around 2000 mid 2016 when i kind of came up with the concept um bitcoin was obviously you know the king at time it is still to some degree but back then um it was pretty much concentrated around a couple of months i mean and that was kind of the trajectory that ethereum is going to head on with proof of stake as well um if you know a decentralized solution didn't quite present itself so um that's what really made me put my head down and kind of kind of come up with the initial concept of how it would work um it's it's taking a long time to get here so it wasn't an easy thing to produce but um yeah it's i mean as far as rocket pool itself goes um i think the main

thing i'm probably you know proudest of is obviously the decentralized nature of it and also the client diversity because that's something that we really kind of need to um promote uh within ethereum itself uh especially obviously with the staking because currently there is 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 um you know enabling ethereum to be a healthy ecosystem and not to centralize around any central aspect so that's quite what we've been promoting essentially darren anything to add on to that uh yeah so i think i mean we've only really been in operation for a little while so it's

it's difficult to tell um but we are already kind of seeing a bit of an effect on the client diversity um we've implemented uh in our kind of the way that you install our software and we have a thing that essentially suggests if you if you um 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 um we suggest you choose another client um we're already kind of seeing that in some of the proposal numbers and from the rocket pool proposes um that um lighthouse is is definitely popular but

other um clients as well are very popular so nimbus is very popular and and taku as well and prism is kind of a smaller percentage of our uh kind of node base so far and that will obviously change over time but it's we're already kind of seeing that which is really nice to see and of course a big part of the the rocket pool story is actually um reducing the barriers to entry for east staking right uh once again like they've 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 32 but then also 32 east has moved from you know where it used to be at ten thousand dollars up to where it is now with that over

uh i'm not gonna on the fly math but over hundreds of thousands of dollars yeah 320k let's just say that let's imagine a world where eat this 10k already i'm living in the future david [Laughter] ryan's hiding the fact that he can't do quick math either but so yeah so like 130 to 300 320 000 like or you know this is it's too much for one person uh but also that's not only that's not only uh 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 uh nodes you can bring your eth right and so like which which of the resources do you want to bring to the network because

rocketpool can can match make uh between the node suppliers and the east suppliers and and uh correct me if i'm wrong but i think of all staking as a service providers out there uh i think that the next highest one is only coming in at like 13 individual nodes where rockpoot rocketpool is clocking in at over 400 and also doesn't have any constraints on the total number of nodes that can be contributed to the overall overall network uh is that right yeah that's correct um yeah so it's obviously um built in the protocol that we incentivize these node operators join and it works we don't restrict any one party uh pretty much if you uh can register a node with our network uh with the protocol i should say um then yeah

you're free to free to join i mean everything's balanced within rockville through incentives built into the protocols we don't need to enforce uh any kind of restrictions on location or anything uh everyone should work in everyone's best interest based on the kind of tokenomics and mechanics that are in the protocol so it's permissionless for nodes to join the network i i want to maybe share some some metrics here this is um on the dune dashboard on dune analytics dashboard on rocketpool so just making sure that uh everybody listing kind of understands some of these numbers here so the total ether amount staked is over 24 000 as we mentioned uh total each submitted to rocketpool 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 yeah so there's there's a deposit pool um that is uh actually i need to double check where those numbers come from but um there is a deposit pool here so there's um uh you deposit into uh our 8th stake is deposit into a deposit pool and then that gets matched with um 16 eth from other operators and then we have 450 registered node operators so these are individuals or you know companies or groups whatever these 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 we pretty much only require a node address to to be registered so we we can't tell we don't hold any specific information about any node operators or anything um it's part of being a permissionless kind of a protocol so you 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 uh if you if you do register your time zone and it is auto detected um 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 basically see nodes from all across the world so yeah it should be a stake dot rocket pool don't it state.rocketpool.net yep and this will show uh let's see i'm just pointing yes now if you uh go to the side there that little side menu and you click on yep should be a network map yeah so that's that's the network map yeah so that that's built out of the uh nodes that registered uh on the protocol so the only thing we record and this is optional like you can

see down the bottom there's 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 um do that so yeah this shows you a pretty broad general map of all the node operators their location uh the corner editor that's being staked in that location so you can see if it's centralizing 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 to show this on a map we need to kind of grip them together as well so for those uh who can't see this or maybe listening to the 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 uh across all of the

different continents so we've got uh 240 north american nodes 119 european nodes 20 asian nodes in the pacific uh as well australia uh south america some are hidden as well and this really spans the the entire globe and i guess that is the the big distinction with rocket pool 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 yes yes that is definitely correct what is uh mini pools what what does that mean

that's that's our version of a validated backup basically so that's rockable validated which is made up of 16 other from a node operator and also 16 other from uh the protocol itself so the protocol uh gets its other from the deposit pool which is what people send ether to when they wish to receive our re liquid staking token so they're basically staking uh themselves for free so we don't charge no doubt it's the stake in the network um so but and they also earn a commission for staking that other 16 other that comes from the protocol um from these rf users so it's kind of a unique balancing opportunity where you balance uh deposits from people who will come in that want to do liquid staking but not run a node with those that do want to run a node and earn a higher commission

than they would staking solar or basically through any other way currently available i think would be the most profitable way to stake with a node uh currently there was another number there that we're going to talk about later these are uh oh um odow uh operators right so it's like the oracle network which we'll come back to later but i wanted to show this um this this chart i don't know how old this is this is you know uh something i've seen before but this is current uh the current it's a pie chart of all of the eath 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 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 and we're starting to see maybe a little bit of that with eath 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 uh coinbase on this list so that shows me the coinbase is sneaky with their addresses yeah okay so something is missing here like coinbase should definitely be here we have lida which is spread across like 13 different validators uh but anyway i guess i want to ask the question do

you think that eath 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 rocketpool dave what do you think first yeah i think it is heading in that direction i mean you can see that basically on this chart the way it is for currently and we always say 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 um kind of the lowest fee to stake with them and so forth 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 uh minimized in the long term as you know potentially other decentralized second services come online too yeah what are your thoughts on that darren yeah i think that we're it's it's definitely um centralizing uh and we need to go in the other direction uh so hopefully that is where we come in um 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 d5 um in every wallet um and all 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 a to try and make uh our ethos as ubiquitous as possible

the last thought so that everyone has access last question for you guys and it's kind of the vision for rocket pools is do you see uh rocket pools as kind of like a public good or like veering in that direction right so um you know we've we've recently seen ens uh launch launch a token do an air job for instance and that is more skewed towards the public good side of the ethereum defy ecosystem right it's like they don't view themselves as uh another kind of identity defy type apple or ethereum applications themselves yeah they're not a startup they're 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 and of course people in ethereum uh on the eth2 team will recognize that there are multiple eth2 clients uh you know there's there's prism there's nimbus there's many others and it's kind of a public good to try to balance out the 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 rocket pool like a a public good or is it is it veering that direction or you know what do you think of that concept uh dave um yeah i i definitely think we are peering in that direction if we're not

there already um pretty much the goal from from day one was to make um a kind of a decentralized protocol that helps the ecosystem that it runs on so it's pretty much a positive feedback look where the bigger decentralized they can get the better the ecosystem is the better client diversity gets uh and so forth so um we 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 um it's all run in it through incentives basically incentive drives the protocol itself so we don't really we can't say you know x you know this will happen here this will happen there it basically just all kind of drives itself through incentives so

um hopefully that does work in you know the the larger ethereum protocol um uh over the long term and i i do think it will have a positive influence and that's kind of what we're going to try and kind of um yeah do do going forward yeah yeah and anything dad uh i they've covered it quite well uh on the spectrum on the spectrum of things we are definitely on uh the kind of protocol decentralized end uh it be trying to be as kind of neutral and um uh yeah and yeah as decentralized as possible essentially i'm going to use this word at least four more times during this podcast but just like how this industry is a industry of

crypto economics uh rocket pool is a cryptoeconomic fractal off of that was the word fractal off of ethereum and so ethereum uses cryptoeconomics to sustain itself it uses incentives to encourage people to buy and stake ether to secure the network and rocket pool does the same thing but with a more usable uh more uh 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 are approaching the decentralization maxi angle and the the the one the the the application layer of ethereum where the application actually

resonates with the core protocol itself uh ens comes to mind as ryan said but also uniswap2 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 rocket pool community so i want to 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 this is going to be a land wine question i'm going to walk around campus because i'm going to cop a lot of stuff um yeah no obviously we are very passionate community um we pretty much always always have and i think that is driven

from the previous question where you're working uh towards the benefit of the protocol itself um trying to instill good in the thing that you're building on top of uh so i do think that kind of comes through in the community um we have a lot of very passionate some incredibly talented people too like a lot of stuff that is being uh built for rocker pool uh so we have a metric dashboard by vgr which is really good uh we have a bot in our discord which reports any events uh in the report network done by visible civil that was really good as well um so like we have time for metrics ourselves we can kind of see what's going on in the rock pool network at any time but now thanks to our community efforts in our discord any event that happens in the rockfall network is immediately reported

by this spot so um and that that's just that's just the tip of the iceberg i mean we have people that do um you know like uh various bots reporting you know rpo ratios prices stats uh all that kind of stuff um yeah it's it's just been an insane obviously i'm going to have to mention the trading channel because this is pretty much the uh the core kind of passion of the discord does does shine through this channel and is um it is actually one that i created uh a few years ago to kind of like just put all central training talk into the one spot because at the time a lot of discords didn't allow trading or kind of price talk 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 uh snap snuck it down the bottom of the discord at the time and i just wanted to accordingly 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 it is it really is and we have an absolute ton of other channels too that go a lot over more technical stuff like smart contracts smart nodes a whole bunch of other stuff and the people that participate in these is obviously extremely some extremely talented people um 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 legs ahead before it ever hits maintenance so we're definitely going to listen to the community as much as we can just for the listeners that are not watching this on youtube you know that the listeners are uh tuning in when they also start uh going hashtag training in the youtube chat trading in the youtube chats and also uh channel trading is the new general so like the the rocket pool community is here and uh and i i really think it's a the nature of how rocket pool came to be uh that really is emblematic of something that uh was really conducive to create a community around it rocket pool 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 right and again love the word fractal here there's a lot of uh organizations like this in in defy 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 dow be the be the system that scales the message right and that really seems to be what's going on with the rocket pool community where it's the rocket pool community that's taking the reins and just leaving dave and darren and the few other members of the rocket pool team to to actually be like the the guys to build out the system uh but how has what is the the rocket pool community like stepping into the shoes of like are they are they doing things that are just beyond what you guys are are doing at the rocket pool like org like what are

they up to yeah so actually um a lot of things that well first of all they're their feedback is invaluable so anytime that we um put out any sort of research or we put out um any code or anything like that there they read their kind of feedback is invaluable in that um but the other thing and so things like uh we have a huge list of integrations that we're aiming for across you know all of these fire and and wallets and all that sort of thing and so our community is kind of playing a part in that outreach um to reach out to some of these protocols um to get information about these protocols to

explain some of the protocols to us because d5 is expanding so quickly that uh sometimes we need to catch up on that as well so so yeah they are they're kind of i think at every step of the way they've been kind of building rocky ball with us and so it's been fantastic do you guys think that uh rocket pool falls into the responsibility category in the same way that ens and kind of get people lumping git coin into where rpl is a responsibility token since it manages the the economic resources of a public goods that's an interesting take i haven't heard of that one before but really yeah yeah no i i think that's yeah pretty pretty close to the point actually i i i think who who was it brantley from ens

who uh coined this phrase responsibility yeah yeah after the ens drop he said you weren't air dropped money you were airdropped responsibility this is kind of like hey you're holding a token but this token is key to uh you know a an important public good for the ethereum ecosystem and take it seriously like do your job actually govern this protocol and make responsible decisions um does that resonate with the rpl use case in your community yeah well as 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 ahri that a liquid stacking token um its value is driven by the performance of the node operator so

basically having built insurance is critical for that aspect i mean if you're going to have a decentralized liquid stacking token that is you know abundant in the d5 ecosystem you need to have its value backed um you know responsibly so this is done by the node operators who stake a certain amount of rpl themselves which if they you know ever mess up massively this gets practically slashed then option sold that ad is then given back to the protocol to kind of make diary users whole so that is an absolute critical part of their infrastructure at the moment to make sure that r8 the liquid second token is pretty much always going to have you know its value remain and not not be slashed not have any kind of issues happen to it um through a node operators uh fault so

that that is definitely a critical part of our infrastructure and a big responsibility for no doctors to make sure that if they are staking a lot they need to kind of stake a lot of rpl at the same time to make sure their insurance is uh adequate and that they are rewarded for this the more insurance that they basically give the protocol in the form of staking rpl the more upgrade they earn through our inflation protocol which is also backed into it that is given to them as a reward for putting up this uh insurance bond so it is absolutely crucial and i would say it's uh the more up here you stack with no gopro the more you are kind of doing a a good service to um toronto pool so one question that's coming in from a community core community member i would

say super fizz is uh say say rocket pool is maximally successful and uh actually just becomes too too successful what happens if like more than 51 percent of all ethers staked via rocket pool is this a centralization risk okay or is that kind of antithetical yeah that's that's a really interesting one um i'd say it's almost antithetical but at the same point you know we are a smart contractor based protocol which does come with with risks as well which everyone should kind of take on board when they when they participate so um yeah having more than 51 of you know validators going through rockpool which also goes through smart contracts which as i said have their own kind of risk so that that would be a worry for me if we

did ever get kind of that big um 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 past before it did happen in some way on i'm yet to think of but i'm sure we could come up with something so i mean one so one thing to bear in mind about that though is so uh so rocketpool doesn't actually have any influence over your your validation duties um so the the only the only point at which rocketpool really comes into play is on deposit and withdrawal so that they're the two um points at which uh we would you know

that there there could be some sort of influence um but more in terms of because we're decentralized um you know that's mitigated um so that's the that's the that's the only thing there so we don't have to have any kind of influence over your validation duties necessarily so all things being held equal if we could just somehow just eliminate the world of smart contract risk there is no way where rocket pool could have some sort of outsized control over the ethereum network because it's not actually controlling the nodes is that the answer yeah that's that's it so we have yeah like 450 node operators right now so um yeah that's definitely the answer we're not running 450 nodes ourselves

i can assure you that it's definitely um yeah other people uh so i want to ask about our eth uh so let's go into the very basics of our eth and we'll kind of talk about the game plan for getting our youth integrated into d5 but our eth is the staked east derivative token so when you come to rocket pool you deposit your ether you get our eth in return but our eth is means that it's supposed to capture the er east derivatives that are generated by eat staking so can you guys unpack the dynamics behind how our eath actually goes up in value and capturing the actual ether issuance that's issued by ethereum um dave you want to take that yeah so so with the ra token so it's designed a little bit differently to um

some of the other liquid staking tokens that are out there at this point um we actually came up with the idea of liquid stocking uh 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 eighth would work um 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 um this creates kind of a literacy situation for various uh tax issues depending on your country so i won't give you any tax advice but if you are receiving um you know constant rebasing on a liquid staking token this can make tax uh very very kind of hard to manage and it's also kind of treats

it as an income tax whereas the way r8 is designed is we created a token where um once you get it um then it won't rebase it's just an erc20 token it's just perfectly normal but the amount you get uh changes over time if you were staking through the front end of bullseye 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 r8 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 are much easier from an rx perspective because it is just an erc20 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 um

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 uh the way it works is through a different mechanic where if you uh stake let's say you uh stake through rock pool on day one that they were open you might get say you know one r8 per per other that you stake so that's a one to one let's say you come back a week later uh if you stake then say you stake one another you might get 0.995 and so the amount of raf you get when you stack yeah that changes over time so this is kind of it's a it's a relatively simple dynamic but it is uh 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 why we put a lot of kind of thought into this uh 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 450 node upgrades right now staking um you know various validators and whatnot the performance of their the average performance of their validates is essentially what's dictated um in how much rf you get when you deposit uh in the front end of a 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 um i can go into it more than that but i'm probably already making people confused about it

let me let me ask you a question is there anything let me ask you question make sure i understand dave so this is the rocket pool home page right and so as a as as you're saying at first maybe it was one to one right one e3 received one uh our eighth but right now if i stake one each i would receive 0.993 and then a trail of other digits are east now i would expect that our eth uh price to go down relative to eth is that correct meaning it is that's great yeah the performance yeah so we might expect the protocol uh like another month from now this would be like 0.990 or something and then like

eventually it gets to 0.9 and then it keeps it keeps going down is that correct yeah one one way of looking at it is if you press the the two arrows that are that are straight and not on that one the other one above uh this one the yes that's it so actually this way i'm looking at it is a probably a little bit more okay it's a bit heavier but helpful so um we're actually doing some redesign at the moment so uh one r8 is actually worth 1.006 because uh it has accumulated that um since we've been kind of live so as um as kind of the

so essentially what happens is you do the value is that your your rs is redeemable uh kind of goes up um over time and that's that's essentially how it works just keep going up and up and up and up now up only right you know as long as the it goes it goes up and the beautiful thing is this is just a regular old erc20 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 erc20 yeah exactly yeah that's correct yep and importantly uh over time one r eth will you if you buy one r eth

in one year you will still have one r eath but in one year you will be able to redeem one r eth 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 up time of the rocket pool network is all of that correct that's correct yep 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 this system right because yeah you'd only get the tax events when you're kind of transferring in and out of the ref yeah so obviously tax is very specific to what country is so we're trying to give general advice but i mean it was apparent at the time when we kind of designed 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 time super cool if you if you're in a tax paying you know capital gains nation then yeah when you're trading your iris back together that's the only time that you need to worry about so you keep it in re for like 10 years if you wanted to if you wanted to yeah and something i really want to highlight is that this actually democratizes access to eath staking well beyond just the ability to just deposit your ether into rocket pool because you can go buy our eth on uniswap and that is kind of in an indirect fashion contributing towards the r eat staking or eat staking inside of rocket pool because if somebody just wants like well i don't want to stake my node i don't

even know what rocket pool is but i've heard that i can go and buy this reef token and it is a token that tracks ether but also with the distributions from ethereum staking and that just that's a token that's available on unit swap and so you can just buy our ethon uniswap and have all of the the dynamics of each 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 two percent higher than the ether value and so somebody can take their ether deposit into the rocket pool receive newly minted r eth and then sell that into unit swap and collect that two

percent arbitrage and so in addition to rocket pool 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 ethon uniswap it's basically the same thing yeah any comments on that that's very well put perfect and then also that's exactly that's exactly the only thing i'd add to that is um so again just because of our fantastic community so they're actually lps on uh uni swap on on layer one there's also uh on arbitrim and on optimism so you can you can buy um any any any of those places that's exactly where i was going next and we

we all want uh no it's perfect we all want uh things like coinbase gemini to allow users to deposit their assets right on the l2 that's where the users belong uh and so access to staking and eath 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 that's a cool sentence david the risk-free rate of the internet i love that man uh there's an internet bond yeah it sounds that's good man i i don't think i've heard us say that before um can i ask you guys another question because so we all very much don't want um 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 uh the the state goes to centralized exchanges okay so it i i'm wondering how rocketpool combats this like how do you guys compete against the central i don't mind some centralized exchanges uh get getting their cut of the stake in fact i think that's that that's fine i think that's a good thing but if it's like 70 80 percent it's not fine it's a bad thing okay so like and these are very well funded i mean like the coin bases and krakens of the world god bless them they're doing good things for for for crypto

but uh 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 rocket pool compete against that i i see our eth is maybe one way to compete against that are you guys doing anything uh by with with mev getting getting some additional yield into our eth and how else do you compete against the centralized exchanges and give users a reason to use rocket pool rather than just you know stake inside of a inside of their cracking account yeah so like like i mentioned earlier so currently if you're a no doubt paradise

sticking within rockford is already the most profitable way to kind of basically stake your other um and also as you mentioned ryan uh r8 getting integrated into the ecosystem large and far would be an absolute you know game changer for rocket pool itself to have decentralized liquid stacking token as part of the you know as part of the ecosystem or 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 re 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 so hopefully the built-in mechanisms

incentives into the pro protocol are already making it competitive and will continue to make it competitive uh going forward on top of having r8 integrated into many kind of decentralized applications going forward so and one thing with uh mev we are looking at that um going forward uh the merge is probably going to be our next focus in order to make sure uh node operators and anyone running validators in rocker pool uh can kind of uh share you know some of the uh some of the rewards through uh the new mechanics that are gonna be present after the merge so this would enable our in return to gain in value quicker and be worth more itself so you know us building extra things into the protocol to enable node operators to perform better to share you know certain

awards post-merge has an indirect effect on r8 which would then hopefully be uh you know propagated throughout the ecosystem so i think we're in a very good position to be quite competitive going forward i guess one of the things our eth can say is that you're kind of betting on part of the banquet's thesis which is the the protocol sync thesis as david uh alluded to which is the most you know decentralized risk-free staking ether staking bond will win in d5 that's kind of the bet right rather than having a a kraken version of stake death in a coin based version of stake death where it's kind of like usdc right it's like you're dependent on this trusted uh third party in order to

protect it you guys are betting on the protocol sync thesis and that our ether is just adopted inside of the d5 ecosystem and then you're also making sure that uh our eth has a really competitive maybe the highest uh staking reward out there right um through various mechanisms and then adding mev in the future so this is kind of the bet that that rocketpool is making and what you guys are banking on is that correct yeah that that's that's yeah that's pretty much on the money so i i think i can speak for ryan here when ryan i say that top like over the grand scheme of things if we re-roll this ex the cryptocurrency experiment a hundred times

one chain will kind of dominate because of the nature of money uh we i money generally converges onto one money and then other money is kind of kind of lose out do you guys also consider that true for the staked eath fight inside of ethereum do you kind of think it's kind of a winner take all fight for or would it take most winner take most fight for uh which has the most adopted sticky stake to eat token yeah i would probably agree with brian i think when it takes most would be the more apt i don't think they'll ever be one truly early dominant con liquid second coin uh so i think there will be you know there'll be ones that gain a large market share and those are the ones i think can be uh basically built into other protocols you know other

decentralized applications um and as far as as far as ir it goes being a decentralized liquid stake in 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 100 um so what's that what's the game plan for getting our ethe into all the defy apps or is that something that you guys are leaving up to the community um we we do have our plans themselves but the community as as usual is charging for doing uh some of this for us so we have people you know providing uh liquidity some people are you know working on building r18 or actually doing proposals for re

to be integrated in things like maker and whatnot so we have uh our ever present and always passionate community uh helping us out with that well 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 pies at the moment 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 uh that the token price has been on a tare recently also talk a little bit more about business development for 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 matcha everyone's favorite decks aggregator has just

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rocket pool 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 uh we brought up the conversation of mev and just for a tldr mev is called my 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 um some value out of that that power this is a very big conversation where we've done a ton of podcasts on this in the in the in the past it's it's like a 500 501 level conversation uh and so a lot lots of previous content so we can't really go into the dynamics here but the point is that each staking allows to extract more value out of the power to order

transactions and validators have this power and so part of the value of our eth as a staked east derivative token part of the the value of reef comes from the ability to capture the value of mev but i want to i just want to pin this question down who's responsible for actually capturing mev is it the individual node operators or is it rocket pool 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 rocket pool sorry i'm terrible at picking out names yeah yeah so uh so node operators will be collecting mev um

so in actual fact it'll uh it'll be the execution client um operator and which will probably be the same person as the node operator um but to be specific they uh they will capture the um the the um mev um so we're actually kind of announcing today uh we're part of the flashbots heath 2 working group and to kind of make sure that um mev is kind of 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 um so yeah

they they can they control it but what we will be doing is implementing a way so essentially they will be sharing it with the with our eth users and so we can we can and 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 in that discussion but and that's that's where we're going with it this is kind of the reason that dave uh opened the the trader channel in the rocketpool discord right because it is 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 four percent on rocket pool or five percent on rocket

pool to like 10 and so if coinbase or kraken is doing mev type stuff and rocket pool isn't well rockpool's not going to be able to offer the uh the highest yield right and so um the flashbots thing if i understand this is just a rudimentary understanding but flashbots seeks to sort of democratize mev and so if you incorporate flashbots into sort of what the the rockable node operators have to run then you can kind of democratize mev across all of the 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 it is that a correct way of understanding it darren are there some more no that's that's exactly it i mean there's also um 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 um it's certainly a feature that we're looking at is essentially a smoothing pool so mev is very spiky uh you get yeah you get you get kind of um very big uh kind of proposals or very

big um bundles and you get them smaller ones um so it it's very spiky so one of the things that we're doing is putting this moving pool into place so that 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 um if they if they would kind of because essentially it's a roll of the dice each time it's involved with the dice whereas this kind of evens it out and gives them a kind of a smoother return 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 e holders or or is there an incentive misalignment issue here uh there is and that's why we um we put out a kind of post a little while ago because it actually has it with uh priority fees as well um so by kind of particularly with priority fees um if you if node operators aren't sharing that because half of the um half of the money essentially half of the heath that is their staking is not theirs so um it's essentially kind of a moral um 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 that's right 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 and then we do we do have a um one of 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 kind of penalty and so if they do the wrong thing then we have a penalty in there as well 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 yeah and we get a lot of feedback from our community on this stuff as well at the moment we do play a kind of shepherding role and being kind of like the core devs and but we're kind of moving out of that um on an ongoing basis so now that we have the odell set up and that's kind of moving along those lines in terms of decentralizing that gut that kind of

part of that governance and we'll be doing more and more of that as we as we go through very cool so you said odo and oda is about running a node for rocket pool 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 solar solo staker i have my computer i've got my 32 eth why should i stake with rocket pool what's the incentive for me to do it through the network um so if you're a solo sticker obviously staking within rockapool um is is uh more profitable i mean that's that's pretty much the main incentive i mean if you stay within rockpool um you will get a commission for staking on behalf of the protocol that other 16

other that comes from the deposit pool um that that's a big one you also get rpl rewards depending on how much you kind of um put up an insurance promise in the way of collateral rpl collateral um 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 sticking solid that might that trade-off might be worth taking so long just for you know for the help of the network as well so it really comes down to um yeah your individual node operator and what they're kind of um yeah their kind of stances on you know operating within a protocol and getting more you know more income or operating without just you know purely because they're not you know risk adverse in in any way shape or form yeah so dave what

does a node operator actually have to run as far as you know software what are kind of the the requirements for a node operator to uh jump into the network um 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 uh it'll get you up and running really quickly cons bonded with an f1 f2 clients you know you can choose which one you want and as we touched on earlier you know if you choose an s2 client there might be prism it will kind of hopefully steer you in the direction of another client just for the help of the network um and this is all a super simple package so like you can try it out only our producer testing it obviously you don't need to run one

stream on mainnet you can we have a tester on crater uh the gorilla slash predator testnet um you can do that quite easily all you need to do is download the stack you know have have a linux box or something set up um pretty hardware of coins are pretty low i mean obviously if you're running in f1 if you we do provide the option to use like clients for f1 so like inferior and stuff like that as well but uh if you do want to run uh geth 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 that probably you know 1.5 terabytes something like that um 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 protocol um outside of rocketpool that might be another incentive uh for you know an external stakeholder to kind of join rockpool is the simplicity of this software how it gets set up 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 uh through f3 outside of rockpool 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 in one uh easy to go one that makes registering with rookbot smart contracts and interacting with them are also pretty easy on top of that i think uh bitcoin maximalists are in

disbelief there dave when you said a node and ethereum node is actually easy to run with a rocket pool but i could attest um we're actually running one ourselves so we're going to talk about the odow network ourselves and bankless uh the the entity is part of the odow network where we're supporting rocket poolness uh this is an image of a raspberry pi in an undisclosed secret bankless location one of our masternodes friend yeah one of our devops friends uh has set up for us and this is uh 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 um you know smart stack 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 uh easier can you talk about that for a minute though we mentioned uh odell uh what is um what is kind of uh odell and um you know what are their responsibilities okay so the oda is what we call the oracle dow within rocket pool so this is this is something that kind of enforces checks and balances within the network it's an actual on-chain down made up of

various members ourselves bankless we have a bunch of the client teams in there as well their two client teams um you know both the main uh block explorers other scan beacon chain as well so it's a it's a down made up of um you know people in the ecosystem have who had the um oh i have the ecosystem's best interest in mind so yeah that's that's it just there so what this is this is an on-chain set of uh nodes within the rocket pool network uh they operate like i said in the true on chain down members can be invited members can be kicked if they misbehave you know members must place a bond um to basically join uh and their main purpose is to relay data back from the f2 chain to the f1 chain so actually beacon chain

is separate from that one chain and we need to kind of keep track of the performance of all the validators within the rockable network uh these guys do that and they also report back to our smart contracts so that our balance can get updated daily so uh they're very important and they operate through a consensus mechanism so that any data that gets reported back from the beacon chain to the main chain requires at least 51 percent of these node operators to agree so known you know single oh down node operator can kind of go rogue and start reporting back you know insane balances to throw up the rh ratio or something it's all done through a consensus mechanism and they also are in charge of uh enforcing uh something that we came across recently was the ability to

submit a deposit to the beacon chain uh using different credentials then the smart node will provide you essentially so it's kind of a way to to basically cheat the rocker pool system and almost feel a deposit so what we've done to kind of enable this is these oh downloads perform certain checks and balances to make sure uh signatures for deposits are valid um if they're not valid then you essentially get a whole bunch of other stuff on the big chain and can only withdraw that uh when withdrawals are enabled so they provide er enforcement but most importantly they provide uh reporting which is why they're called oracle notes so um they have a whole bunch of um important duties but those are probably the two most uh important ones and um yeah so

they they operate in their own doubt and you might see new members come and go based on invitations proposed by current members so we we are no we are not in control of this doubt we don't have the majority um so it's a true true entree endow that we've designed for for rocketpool true to the nature of dao's rocketpool becoming more of like a collection of of micro organizations resembling one larger organization uh and somebody in the youtube comments is uh making it very well known that the the documentation for downloading a rocket pool node is fantastic uh and so if you want to both like join a dao and a community and also learn how to run your own node uh maybe rocket pool is the place for you to go um 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 uh 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 as you've been saying insurance uh 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 the cryptoeconomic sustainability that all systems need yeah absolutely so like i touched on earlier um insurance to make sure no doubt parade is performed is a big one because we don't know who these net operators are we don't know you know if they have a good setup they have a bad setup you know it's permissionless they can just join if they can you know

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 um if you put up a big you know kind of insurance bond to say all right i'm confident in my no 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 our eight users 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 likes built into rocket pool that that's just one aspect of popular so it actually has a couple of use cases uh beyond that um it's a utility wise and it's extremely valuable

to the protocol basically um if like i mentioned earlier um if with the oracle notes if they detect an invalid deposit signature uh through any of these validators that are created within the rockville network you know it's basically someone trying to cheat the system um it will basically um yeah get get rid of some of your rpl as well that you put up um also for the smoothing pool that language touch on earlier regarding to the mev um yeah that's an enforcement mechanism there kind of a characteristic approach where uh if you don't basically forward 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 road behavior when

you're not participating 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 for their other as well so that's a couple of it um we also have the the oracle uh dow bond so the oracle dabon 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 plain up not reporting they've disappeared or somewhere like that uh these members have the option to uh kick that member with an optional burn to their original bond so that's kind of another characteristic approach to make sure that you are

working in the protocols uh best interest through uh financial incentives so there's a multitude of reasons and there's probably more that i actually haven't touched on right now but that's that's pretty much uh a large part of our token oh i should say sorry i'm almost forgot such one um rpl built into rockport is inflationary so in order to drive uh you know these players that to all work in each other's best interest they get a certain proportion of this uh inflation that then gives them a financial sensor 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 is based on the amount of insurance that they're putting up and so forth as well so it's it's um yeah it's a multi-faceted uh token at

the moment that plays a pretty key part uh in the protocol um because the our tokenomics were worked on by a firearm in us over quite some time so it's not something we just slept together every night it's a very kind of thought out system so let me let me see if i can regurgitate the gist and see if this is this is correct uh 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 rocket pool instead of with 32 eth you can come with the minimum of 16 eth but my question is uh since you since

rocketpool already enforces 16eth on the node operators isn't that the insurance for uh for honest behavior because you guys don't allow somebody to bring a node with zero eth they have to have at least half of the eath which incentivizes the alignment behind the the node operators and the depositors of eth um and and so is is a first question is is isn't that already the thing that incentivizes alignment uh actually i'll let you answer that question before moving on uh yeah so to a certain degree so beyond a mass slashing event that would pretty much decimate any kind of node operators uh deposit beyond that um and as i touched on earlier um also the

ensuring they're playing in the protocol's best interest through uh mev through odow yeah and basically uh depositing uh correct withdrawal credentials so yeah there's a whole bunch of facets going to that but yes so if if a node operator does perform just minimally badly that it's taken from their other because we don't need to sell that auction if there's a mass slashing event then beyond what they put up at 16 and then if we ever want to reduce that for any reason in the future we kind of need that uphill there to back up that other amount in case it's not sufficient for the penalties incurred and the penalties are getting worse on ever on the beacon train as well they are increasing these gradually um i i think you'll see the the few slashing events

that happen so far haven't been that sphere but they are ramping up the severity on that based on the maturity of the beacon chain so since rocket pool is a network on top of a network rocket pool is on top of ethereum there are just additional behaviors that can the additional surface area that can be attacked uh and so you guys the rocket pull system just uses the rpl token as kind of a universal plug of the uh attack surface areas is that kind of a way to describe it yeah that's pretty good so yeah and obviously i was incentivizing uh correct behavior to not uh try and exploit any of those uh avenues yet so uh one critique i've heard of the rpl model is that it's capitally intensive uh 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 uh or you could do it with rocket pool and try and get some of the rpl rewards as well in order to you know 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 rocket pool that you also need to bond so does this token model make make the rocketpool system capitally intensive um well most of our note all our note offers are required to bring 16 over to the table plus 1.6 other rpl based on the minimal insurance bond uh so if you had 32 other um outside of that you could obviously take that to coinbase or

somewhere else and stay through them um if you bring it to rockefeller you can actually have you know create two validators and double your chances of getting proposals uh as well which is another financial kind of incentive for that uh on top of things so um yeah i mean it yeah it really come down to the note operator but i mean 16 other is still a lot and we are definitely looking at other ways to kind of uh reduce that in the future and still keep node operators uh incentivized to perform so the reason why we do 16 you know down the middle at the moment is because if you you have as much online as the protocol does so if you mess up uh any kind of small way then the protocol do you suffer as much as the protocol does because your rewards are

ultimately based on uh your performance as a validator uh in the rockable protocol so um yeah i want to get uh you know trader channel discord for a second here what is up with the the rpl price here lately guys uh it's been absolutely incredible so a year ago market cap was like 50 million and now here we are like 850 million um you know is this part of i 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 shipping or do you have any other explanations for this or should we just head to uh the trader channel for discord and hear their theories instead

yeah you could definitely get a training channel for that um but i mean for me personally um obviously it's been a project which couldn't really be realized until smart contracts withdrawals were enabled on the beacon train that was something that only happened around february this year so i don't know where that coincides with uh the price of things but obviously once that was announced into the spec for ethereum two that mean rocketpool could be truly decentralized around that time we're also going through audits and whatnot and we went through uh three rounds of audits with some of the biggest in the industry to kind of um make sure the protocol was safe to use was efficient in what it did um so i think a cognitive of those events kind of leading up to our launch um yeah i

think that's it i mean we've we've been around for forever so people and we also never really overly tried to push uh the token prices only 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 reflecting the price but we don't try to overly push price or anything like that that's that's the trading channels guys you know i just love the the rpl community because uh somebody again from the youtube comments is saying the strongest cat alive saying uh we don't watch the us dollar price ryan we watch the eath ratio when it comes to rpl price and so that's how you know that's how you know oh my god yeah what are rpl holders more bullish on ether rpl it's going to be hard for them to pick

though so as we come to a close guys i want to ask you a couple questions about maybe the rocket bull road map and then the ethereum road map but darren uh can you talk about the the rocket pool road map like what's what's coming next here is there a plan to expand into staking for other genes or do you guys intend to be sort of like ens style ethereum only tell us a bit about the road map so um so in terms of the kind of chain discussion um we're not really against other chains but and with 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 there's a lot to unpack

just in the ethereum ecosystem and and to be honest we are we are kind of ethereum um uh we are gonna use the m word you're about to use we just we just aligned with the ideals there we go um and we and and and we love the the community and the ecosystem as well so i think that's the that's the real the real thing there um so we probably won't see um other chains um soon um but we're not ruling out but that's that's that's where we are at the moment um uh with in terms of the roadmap the the big focus is on integrations so um wallet it's the query pools block explorers lending protocols um oracles

data feeds and all that sort of thing and so we're rolling those out as as quickly as we can so that we can get our e's everywhere um the the other things are on the roadmap obviously very close is the merge and so we definitely have some work to do around that uh we're trying to leverage l2 as much as possible so that that's definitely something that we're um keeping on as well and so yeah there's it's going to be a very very busy next few months yeah is the merge going to be a big left for you guys is this going to be a uh a pretty massive undertaking and what um you know when do you think that's coming do you think this is really gonna happen uh first half of next year or given all of your roadmap experience with ethereum

uh do you think it could take a little bit longer i don't think it's good for us to speculate i think i think uh we'll we'll leave that up to the core director to to put a date on that but um yeah we we're definitely excited about the merge uh it's a game-changer really for us and because it means that validators are you know um first-class citizens in in ethereum so uh it it'll be a very very a good time for us well guys uh closing questions then we we asked about the the road map for uh for rocket pool now let's talk a little bit about the the road map for uh ethereum and this kind of needs final

question i i've gotten the sense throughout this discussion that um the thing that keeps you guys going is like this uh 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 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 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 what do you think about the uh the future of ethereum um yeah as far as values goes 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 rockapool at this point to kind of bring decentralized staking to 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 from me personally uh as far as the ethereum roadmap goes and uh well not that's we've had a lot of

experience with that in the past so um but yeah i mean i won't speculate on their their kind of um you know where they're headed with things and whatnot but um i am definitely on on board with theorem 110 percent always have been since i pretty much got into it so i'm not going to use that word either but um yeah i'm very much um yeah a kind of a one-chain guy i can't i can't see it uh any touch wood i can't see anything replacing ethereum for a long long time um 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 uh your chain

and one and eventually someone will come along this long better and replace it but ethereum is constantly evolving i mean they've done some absolutely amazing things uh with the protocol to date and i think once we see the merge happen and we're not it's it's just gonna get even better so i'm 110 on board yeah darren how about from your perspective uh ethereum roadmap and the values yeah i think as i get really excited about these kind of participation value networks um and uh the kind of open source nature of ethereum itself and also that then that's essentially what kind of rocket pool um is so they're the things that i kind of um uh

get me excited about the whole thing i like the fact that as they've said i like the fact that they're ever evolving and all of that sort of thing um yeah i think that there's a i'm very very uh excited about seeing what the future of ethereum looks like um more and more i'm surprised at what's going on in the ecosystem how bigger things are and how you know a more mainstream is paying attention that's that's like the this this year is has been kind of amazing so um yeah so i'm really really keen to find out what happens daryn david thank you guys so much for guiding us through rocketpool and thank

you for your work uh it's a fantastic network to be part of and looking forward to hearing more looking forward to the merge uh we appreciate you hanging out with us and bankless yeah our pleasure guys thanks for having us on again um yeah we're always happy to have a chat thanks guys we appreciate it action items for you bank list listeners first of all you can go steak on rocket pool 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 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 eath is risky so is heat staking all of crypto is risky guys this is d5 alright 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 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

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