Rocketpool (8 or 16 ETH)
Last updated
Last updated
Rocketpool is a set of smart contracts that enables you to deposit 8 or 16 ETH to create a new validator. Rocketpool couples this with 24 or 16 ETH from the staking pool, where liquid stakers deposited in exchange for rETH, to create a minipool. The minipool is then used to fund a new validator on the Beacon Chain.
To the Beacon chain, a validator created by a minipool functions just like a regular validator. It carries the same responsibilities, follows the same rules, and receives the same rewards. The only difference lies in how the minipool is funded and created, how rewards are harvested, and the process of withdrawals when the node operator decides to exit the minipool.
The following schematic diagram depicts how Rocketpool fits into your staking setup on the AVADO:
You may observe that the processes for Rocketpool staking on AVADO are quite similar to those of Solo Stakers. The main distinction lies in the interactions with Rocketpool smart contracts. These smart contracts are responsible for facilitating the movement of funds within the Rocketpool ecosystem.
Here is a quick comparison between Solo Staking and Rocketpool Staking:
| Solo Staking | Rocketpool Staking | |
|---|---|---|
Deposit Requirement | 32 ETH | 8 or 16 ETH, the balance of 24 or 16 ETH is "borrowed" from rETH stakers. |
RPL Stake | None | You need to stake an amount of RPL tokens as supplemental collateral, equal to at least 10% of the "borrowed" amount. |
ETH Clients | Set up Execution and Consensus Clients | The same |
Key Generation | Use Wagyu Key Gen software | Rocketpool handles this |
Deposit to Beacon Chain | Use Ethereum Staking Launchpad Site | Rocketpool handles this |
Import Keys to Validators | Load keystore.json files into Consensus Client | AVADO Rocketpool DApp automates this |
Execution Layer Rewards | Tips and MEV-Boost | The same (split between your node and rETH stakers) |
Consensus Layer Rewards | Attestation and Proposer Fees, etc. | The same (split between your node and rETH stakers) |
Smoothing Pool | None | A mechanism to pool the Execution Layer rewards of all participants, and even out the payment. |
Commission | None | You receive a 14% commission from rETH stakers for your service of running a node. |
RPL Rewards | None | You receive a yield on the staked RPL. |
Claiming Rewards | No need to claim | Smoothing Pool rewards (incl. commission) and RPL rewards become claimable every 28 days. Consensus Layer rewards accrued on your minipool are auto-distributed when a threshold is met. |
Exit | Initiate exit from your Consensus client. Payout goes to your Withdrawal Address. | Initiate exit from AVADO Rocketpool DApp. Payout first goes to your minipool Address, and becomes withdrawable when you close the minipool. |
Compared to Solo Staking, you can expect slightly higher rewards from Rocketpool Staking due to additional sources of income, namely, commission from rETH stakers, and yield on the staked RPL. Additionally, the Smoothing Pool feature enables you to receive a regular payout from the Execution Layer, even in a "dry spell" during which your validators are not getting any proposal assignment.
To get a sense of the potential return, try the reward calculator on the Rocketpool official site: https://rocketpool.net/node-staking/what-can-i-earn
On the other hand, it is also important to be aware of the potential risks associated with using a smart contract platform like Rocketpool. Besides, you will also be exposed to RPL token prices.
When creating a minipool, you have the option to stake either 8 or 16 ETH as your bond. This bond represents your stake as a validator. If your node performs poorly or violates protocol rules, any penalties will be deducted from your bond.
The remaining funds in the minipool are contributed by rETH stakers. They will pay you a 14% commission on their portion of the fund.
To ensure the performance of your validator, you must also provide supplemental collateral in the form of RPL tokens. The amount of RPL you need to stake depends on the size of your bond. The minimum requirement is 10% of the amount of ETH borrowed. The maximum stake is 100% of the amount of ETH you bonded.
If you choose to stake 16 ETH, you will stake 16 of your own ETH and borrow 16 ETH from the staking pool to complete the validator. The minimum RPL stake in this case would be 1.6 ETH worth of RPL (10% of 16).
If you choose to stake 8 ETH, you will stake 8 of your own ETH and "borrow" 24 ETH from the staking pool to complete the validator. The minimum RPL stake would then be 2.4 ETH worth of RPL (10% of 24).
Since the price of RPL relative to ETH fluctuates, the exact quantity of RPL tokens required is subject to market prices of RPL and ETH. Always stake slightly more as a buffer.
Choosing an 8 ETH pool requires less capital in ETH, but it necessitates a higher amount of RPL tokens as collateral. In return, you earn more RPL rewards due to yield on a larger amount of staked RPL, and a higher amount of commission based on the larger borrowed fund.
A unique feature of Rocketpool staking is the Smoothing Pool. The Smoothing Pool is a mechanism to collect and accumulate the Execution Layer rewards of all participants, and even out the payment fairly to both the rETH stakers and the node operators. In essence, it becomes the Fee Recipient for every node operator that opts into it.
The Smoothing Pool serves to effectively eliminate the randomness associated with being selected for block proposals. If you've ever had a streak of bad luck and gone months without a proposal, or if your block proposals only have low priority fees, you may find the Smoothing Pool quite exciting.
By default, Rocketpool Stakers on the AVADO are prescribed to join the Smoothing Pool.
The following are the steps for setting up Rocketpool staking on AVADO:
Set up the ETH Clients, and MEV-Boost. Similar to solo staking, you will need to set up your Execution and Consensus Clients, and MEV-Boost. Refer to the following sections on how to do these:
Install the Rocketpool DApp. Install the Rocketpool DApp on your AVADO. This provides a user interface for AVADO users to interact with the Rocketpool smart contracts.
Set up a Rocketpool Node. Your AVADO will host one single Rocketpool node. The steps to set up the Rocketpool node include:
Initialize a Hot Wallet (also called the Node Wallet)
Fund the Hot Wallet
Register the Rocketpool node
Set a Rocketpool Withdrawal Address
Join the Smoothing Pool
Add Minipool(s). Once you have set up a Rocketpool node, you can add one or more minipools to start staking. You can run a mix of 8 ETH and 16 ETH minipools. You can also run a mix or Rocketpool minipools and regular solo validators.
Backup your Minipool. Download the Rocketpool Backup File for safe-keeping. This file contains all the necessary information to recreate your Rocketpool node and minipools, when needed.
Monitor Your Node. Stay informed about your minipools' performance and status. Utilize the beaconcha.in website and mobile app for real-time updates. Also check out rocketscan.io for additional insights across the Rocketpool network.
Claim Rewards. Learn about the different income streams and how to receive or claim your rewards.
Exit from Rocketpool Minipools. If you decide to exit Rocketpool staking, the guide will provide you with the necessary steps and information.
Let's get started!
