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About Rocket Pool
Disclosures
Rocket Pool risk
This material is for informational purposes only and is not exhaustive of all risks associated with trading Rocket Pool. All crypto assets are risky, there are general risks in investing in Rocket Pool. These include volatility risk, liquidity risk, demand risk, forking risk, cryptography risk, regulatory risk, concentration risk & cyber security risk. This is not intended to provide (i) investment advice or an investment recommendation; (ii) an offer or solicitation to buy, sell, or hold crypto assets; or (iii) financial, accounting, legal or tax advice. Profits may be subject to capital gains tax. You should carefully consider whether trading or holding crypto assets is suitable for you in light of your financial situation. Please review the Risk Summary for additional information.
Investment Risk
The performance of most crypto assets can be highly volatile, with their value dropping as quickly as it can rise. You should be prepared to lose all the money you invest in crypto assets.
Lack of Protections
Crypto assets are largely unregulated and neither the Financial Services Compensation Scheme (FSCS) nor the Financial Ombudsman Service (FOS) will protect you in the event something goes wrong with your crypto asset investments.
Liquidity Risk
There is no guarantee that investments in crypto assets can be easily sold at any given time.
Complexity
Investments in crypto assets can be complex, making it difficult to understand the risks associated with the investment. You should do your own research before investing. If something sounds too good to be true, it probably is.
Concentration Risk
Don't put all your eggs in one basket. Putting all your money into a single type of investment is risky. Spreading your money across different investments makes you less dependent on anyone to do well. A good rule of thumb is not to invest more than 10% of your money in high-risk investments.
Five questions to ask yourself
- Am I comfortable with the level of risk? Can I afford to lose my money?
- Do I understand the investment and could I get my money out easily?
- Are my investments regulated?
- Am I protected if the investment provider or my adviser goes out of business?
- Should I get financial advice?
DeFi tokens
Decentralised Finance ("DeFi") tokens are crypto assets built on decentralised blockchain technology for financial applications or protocols. Risks linked to DeFi tokens include:
Enterprise Risk
Interactions between multiple DeFi protocols create a situation where a vulnerability or breakdown in one protocol can trigger a cascading effect, affecting other interconnected platforms.
Technology Risk
DeFi protocols frequently depend on external data sources or oracles, and any tampering or inaccuracies in these data streams can result in a lack of trust and reliability in the protocols.
Regulatory Risk
Governments and regulatory bodies around the world can introduce new regulations or ban certain aspects of the cryptocurrency market, affecting its legality and viability, which could affect token liquidity and/or value.
Legal Risk
Certain tokens may be used for operating a decentralised exchange platform which may contain additional risks:
- The platform may allow users to participate who have not been vetted or verified and therefore expose the possibility that users are interacting with sanctioned entities.
- The platform may be accessible in jurisdictions where some or all the exchange activity should be regulated. If a local regulator deemed the platform activity to be in breach of local regulation, they may request cessation or termination of the service which could affect token liquidity and/or value.
Market Risk
Given their novelty, the evolving technology involved and lack traditional asset structure, valuing crypto assets can be very difficult or impossible. This means valuations are determined by demand that is at risk of manipulation in various ways.
Rocket Pool’s price performance
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Rocket Pool FAQ
Rocket Pool is a decentralized protocol that makes it easy for ETH holders to participate in Ethereum staking, even if they do not possess the minimum 32 ETH required to individually create a validator node on the Ethereum network.
Rocket Pool enables crypto users with different staking capacities to participate in ETH staking, providing them with the opportunity to earn rewards proportional to the value of their locked ETH. This inclusive approach allows a wider range of users to benefit from the potential rewards associated with ETH staking.
Dive deeper into Rocket Pool
Following Ethereum's (ETH) transition from Proof of Work (PoW) to Proof of Stake (PoS) consensus mechanism, the responsibility of network maintenance shifted from miners to validators. Validators uphold the Ethereum network by staking their ETH tokens. Rocket Pool (RPL) is a notable staking pool that enables users to actively participate in the maintenance of Ethereum's network. By utilizing Rocket Pool, individuals can contribute to the security and operation of the Ethereum ecosystem by staking ETH.
What is Rocket Pool
Designed for ETH users, Rocket Pool is a protocol that aims to reduce the staking requirements on the Ethereum network. It operates as a liquid staking protocol, where users can securely stake their ETH in a trustless manner towards a network of node operators.
The Rocket Pool team
Rocket Pool was founded in 2016 by David Rugendyke, who also serves as the protocol's CTO. The team consists of highly skilled professionals dedicated to the project's success – Darren Langley as General Manager, Kane Wallmann as Senior Solidity Engineer, Nick Doherty as Senior Blockchain Engineer, Joe Clapis as Senior Blockchain Engineer, and Maverick (Nick Ashley) as the Marketing and Community Manager.
How does Rocket Pool work
Rocket Pool lowers the entry barrier for ETH holders seeking to stake their tokens. It enables users with smaller amounts of ETH to participate in a staking pool. Through a collaborative process, contributors pool together 16 ETH, which is matched by the Rocket Pool network with another 16 ETH from a validator. This combined total of 32 ETH fulfills the requirement to create a validator node on the Ethereum network. As the node carries out transaction validations on the Ethereum network, each contributor, known as a staker, earns proportional rewards based on their stake in the node.
Rocket Pool’s native token: RPL
RPL is the primary token used for governing the Rocket Pool protocol and can be staked on a Rocket Pool node as insurance. When creating a 16 ETH minipool validator, a minimum of 10 percent of the ETH's value must be staked in RPL as a security promise. This insurance serves as collateral, protecting against penalties or slashes that result in staking less than 16 ETH. If the operator falls short, their collateral is auctioned to compensate the protocol. In return for this insurance, node operators receive RPL rewards generated by protocol inflation. The more RPL staked, the greater the rewards.
RPL tokenomics
RPL’s circulating supply currently stands at 19,474,470 tokens, set to inflate at five percent annually. It's worth highlighting that RPL's tokenomics are closely tied to Ethereum staking, as Rocket Pool serves as a staking service on the Ethereum network.
RPL use cases
RPL is used for incentivizing network participants and facilitating governance within the ecosystem. Additionally, the token plays a pivotal role in the Rocket Pool ecosystem, enabling users to pay fees and conduct various transactions on the network.
RPL distribution
RPL takes a unique approach to inflation compared to many other cryptocurrency networks. While some networks periodically burn tokens to control inflation, RPL budgets for an annual inflation rate of five percent. The distribution of these newly minted tokens is as follows:
- 70 percent is allocated to node operators.
- 15 percent goes to Oracle DAO companies.
- The remaining 15 percent is reserved for DAO treasury organizations.
The future of Rocket Pool
With Ethereum's recent transition to a PoS consensus mechanism, the crypto industry anticipates the ongoing expansion of the network. As more users consider ETH staking as a viable option, protocols like Rocket Pool are poised to play a significant role, given Rocket Pool's close connection to the Ethereum network.
Disclaimer
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