Trading in cryptocurrency is no more a ground-breaking thing. Millions of people across the globe are trading with different cryptocurrency coins. There are various platforms across which these transactions are taking place. Ethereum is one of the most popular coins which is in circulation in the market and Rocket Pool is one of the platforms from which you can trade Ethereum. In fact, Rocket Pool is an infrastructure service of Ethereum. The service is distributed, highly decentralized, and highly compatible with Ethereum staking.
Ethereum was launched in the market in 2015 and since then it has become one of the most widely staked coins in the cryptocurrency sector. However, you have to understand that staking does not only mean locking ETH and getting rewarded thereafter. Ethereum has a minimum staking need of 32 ETH, which is quite high for some node owners. Again there are many users who have abundant ETH but don’t have the knowledge and time of running a node. With Rocket Pool, all these issues get resolved as staking in Ethereum gets highly convenient and accessible. The system is built in such a way that it streamlines the staking experience for node operators as well as for ETH giants.
Value Proposition of Rocket Pool
The advantages that stakes and node operators get from using Rocket Pool vary from one another. Node operators have the power of lowering entry barriers and increasing rewards. For running a node, 16 ETH are needed. The other 16 ETHs come from users’ funds. Small as well as large node operators gain from this sharing of the minimum stake amount. Node operators get staking opportunities with 16 ETHs and giants can enjoy better returns on their investments. Stakers also get lower entry barriers. They can deposit more than 32 ETH, are completely free from technical issues, and can socialize the losses with various other stakes.
Since the funds of users are pooled, stakers can earn rewards on 0.01 ETH too without any maximum deposit. The pooled funds get split in multiples of 16 ETH and Rocket Pool distributes them across different node operators. Smaller stakes with limited resources can also join Ethereum 2.0 consensus as Rocket Pool encourages participation in the network making it highly secured. Stakers can keep access to their ETH via rETH tokens. Users get rETH when they deposit money in the pool. rETH grows in value and rewards keep on accumulating.
Pros of Rocket Pool
With Rocket Pool, it has been possible to create a base pillar for Ethereum 2.0 consensus. There are new kinds of issues in transitioning to PoS consensus, which include insufficient security and centralization of consensus.
Various crypto institutions and organizations act as proxies to Rocket Pool. With this, they have the access to offering users extra returns on their ETH without the need of setting up any kind of staking infrastructure.
It is true that with Rocket Pool staking has become easy, more accessible, and more profitable when compared to native ways. As a result, the platform offers lucrative incentives to users for participating in the Ethereum 2.0 consensus. This helps in securing the network in a better manner.
Cons of Rocket Pool
Since Rocket Pool is operational since 2016, the platform has added smart contract risks to running nodes and staking. There might be a bug in a smart contract and this will lead to losses in stakers fund.
Rocket Pool is slightly centralized as some of its Smart Nodes are trusted. The team has plans of including organizations and users on-board, which have a reputation at stake as trusted nodes. It has been seen that trusted elements lead to creating bottlenecks in many decentralized setups.
Trust nodes will act as oracle and be responsible for Ethereum 2.0 reporting data. There remains a risk of data manipulation as there are no smart contracts in Ethereum 2.0.
One of the biggest issues with Rocket Pool is that it does not have a backstop mechanism. For the nodes, it is not compulsory to have RPL security bonding.
Competitors of Rocket Pool
There is no doubt that Rocket Pool is a unique platform for staking Ethereum and that it concentrates on the decentralization of staking. There are many staking service providers, but almost all their operations are centralized. They don’t accept external nodes at all. Though the features of the majority of such platforms are the same, Rocket Pool excels in some areas making it a preferable platform for Ethereum trading.
Community reception and future of Rocket Pool
Substantial numbers of users are interested in trading in Ethereum and they are choosing Rocket Pool for this purpose. In fact, it has become a default staking-as-service platform for Ethereum stakers and traders. With time, this platform is expected to become the best for Ethereum trading. Though small hitches might appear, these can be tackled by the expert team of Rocket Pool.
