ETH Capital has a public ETH Staking dashboard they’d like feedback on and they plan to join the Rocket Pool node operator ecosystem ahead if you had to ask me to guess their next steps.

Rocket Pool Community Call ft. Ether Capital - Twitter Space Link

Rocket Pool is Ethereum Staking Infrastructure

Before we jump into the call notes we transcribed, we want to share our view of what we learned from Brian’s talk.

Institutional investors are considering becoming infrastructure providers through Rock Pool and this is exciting news to us. Our research has proven correct in that the Ethereum Shanghai upgrade that will enable staked ETH to be unlocked will be a bullish indicator for risk-averse investors (80%+ of friends I talk to) to stake their Ethereum at the risk-free rate of return for securing Ethereum’s blockchain.

We believe that as more large and small investors alike decide to stake their Ethereum, many of these investors will find Rocket Pool as one of their top options for self-custody Ethereum staking with high rates of return through running Rocket Pool minipool validator nodes. This is where our years of research have led us and we are now seeing other key influencers join the community and this makes us happy.

Brian Mosoff has been in crypto for a decade and his firm sees the importance of decentralization as a critical element to Ethereum’s value proposition as the most important permissionless smart-contract blockchain.

Now to the highlights of Brian’s insights shared from his institutional investor point of view.

ETH Capital Rocket Pool Call Highlights

• Brian found out about Bitcoin in 2012 and was around Vitalik in 2013 with the Ethereum White Paper in Tornoto, CA at the same time. Brian’s an OG and he understands now that selling ETH to traditional investors can be a profitable public company.

• ETH Capital has 45,000 ETH with 37,000 staked today. They have three strategies to be successful:

  • Net long ETH - acquire more Ethereum and hold long term.

  • Make asset productive - staking Ethereum

  • Build business lines off of their internal tools - Staking Dashboard

• ETH Capital wants to be an Ethereum infrastructure provider (aka Rocket Pool node operator) but not yet an LSD holder.

  • ETFs are unlikely to hold LSD tokens because they haven’t seen regulators give input yet and there are accounting challenges.

  • How do you mark the value of the LSDs with public disclosure? Since there isn’t clarity yet on these two categories, they are not interested right now in LSDs.

• The ETH Shanghai upgrade coming in ~20 days is net bullish and will enable ETH Capital to stack more.

  • ETH Capital has ~10,000 ETH more they want to stake after the unlock.

  • ETH Capital plans to spin up its own validators and run infrastructure

  
  

• Diversification of node operators in different countries and regions will likely be important ahead.

Lastly, here are the full call notes.

ETH Capital Rocket Pool Call Notes

Rocket Pool Community Call ft. Ether Capital - Twitter Space Link

• Brian Mosoff 

  • 2012 Introduction, met a guy selling his house and all of his assets for Bitcoin. He thought he was weird, but started to look into Bitcoin.

  • 2013 - What is Bitcoin? MasterCoin, LiteCoin, + around. Toronto, Ethereum white paper floats around. Side chains around Bitcoin were the big idea at the time. Brian goes further down the crypto rabbit hole

  • 2017 - ETH Capital formation ideation. They had a question; Could they create an access point for traditional markets, like a stock?

    • Exposure to native assets and the underlying businesses - exposure to picks and shovels as well as the assets.

    • The whole point of crypto is to replace the agency. Replace the agency with game theory and a protocol. You don’t need people in the middle to extract rent. 

    • There are other people who do want something that is easy and clean with help.

  • 2018 - Brian joins ETH Capital

    • Public listed company in Canada - ETHC

      • 3 prong strategy

        • Net long ETH

        • Make asset productive

        • Build business lines off of their internal tools

    • 45,000 total ETH - 37,000 ETH Staked

      • Current - self-custody with a multi-sig (Gnosis Safe). Hardware wallets are managed by the directors and leadership.

      • In the future, they want to decentralize more

        • Started ETH staking with Staked (acquired by Kraken)

        • Now they’re with Figment - deployed through their multi-sig

      • What’s appropriate to do when?

        • Disclosure quarterly

        
        

      • Are they holding additional tokens?

        • ETFs are unlikely to hold LSD tokens, but they’re looking at their options from here.

        • We haven’t yet seen regulators give input on LSDs. 

        • How do you mark the value of the LSDs with public disclosure and accounting firms - this is a different process, how liquid is the market, can you mark the assets correctly?

        
        

      • Is it possible for ETH Capital to be a Rocket Pool node operator?

        • They want to do all of this stuff, the question is how. Self-regulation they have to do that’s responsible. 

        • They want to spin up their own validators and run infrastructure.

      • The future Brian sees.

        • Multiple custodians and staking providers

        • OFAC compliance and different requirements per region - we want decentralization to secure the network.

    • ETH Staking Dashboard

      • Twitter Introduction

      • Available for beta testing now for ETH node validators today.  

      • They built this for their CFO who needed to interpret the consensus rewards, execution rewards, and prices marked at the same time every day - to be compliant. They built this dashboard to do their tax returns, could they use this to get more public basic stats like missed attestations or did we get a block proposed on a certain day? 

      • He hopes the tool can do more to hold infrastructure providers accountable.

      • Targeted product at Institutions - but they want community feedback too. It’s in the wild and they’d love feedback.

      
      

    • ETH Shanghai Upgrade and Unlock

      • How will withdrawals affect their business?

        • The unlock will help ETH Capital to stack more. They have 10,000 ETH they want to stake once the unlock occurs. They can’t stake more because they need to pay their bills and be reasonable.

        • The unlock is bullish for more staking for anyone who’s holding ETH that’s not trading it stake it like a bond that’s held until maturity, lol not like the FED bank notes.

        • ETH Capital will stake more and they will diversify their infrastructure.

      
      

    • Canadian Government Approach to Crypto?

      • Structured Products - really good access for retail, ETH Capital listed, and others. Just a few Bitcoin miners are listed in the US. Retail demand has decreased since 2022. 

      • Canada has stock ETFs and the US has futures-based ETFs only, not stock ETFs not.

      • There is a path to registration for trading venues (Exchanges) - there is a path to being compliant.

      • Banking access is still hard to get, but not as bad as in the US.

      • Companies need to ask for permission and he thinks Canada is doing well with overall crypto regulation.

      • DeFi hasn’t been approved.

    • Canadian Crypto Infrastructure 

      • Not a ton of custodian options in Canada.

      • Do we enter a world of staking decentralization based on the country?

        • Maybe we need staking decentralization by country and if we see more hostility to this asset class, some countries will continue to choke the industry.

        • He could see that regulators attempt to choke point staking with new rules that limit investors’ options.

    • How can the Rocket Pool community stay in touch?

      • ETH Capital has a Discord, Twitter, and they want feedback on from solo stakers so they can build a tool that’s helpful for solo stakers.

      • Tweet at Brian (@brianmosoff)  if you want to get ahold of him. Brian wants to help ensure Ethereum continues to be the best smart contract platform 🚀.

Thanks for your time. Cheers to community education, tools, and support!

Thanks to a16z for leading the way with an open-source token delegation program. We decided we should copy and improve upon their model as best we can. Our goal is to improve Rocket Pool’s community through social integrations with trusted institutions and talent.

Regenerative Web3 Ecosystems

Here is how our expertise and web3 stack can be used to empower future leaders in universities today. We’ve started with three universities that our team is affiliated with today.

Why Does this Matter?

We agree that crypto is about permissionless innovation or said in other terms, crypto is about removing middlemen.

Crypto is about removing gatekeepers.* It’s this property that differentiates it from traditional web services, and allows it to remain open, neutral, and fair… *

The end result is an open protocol* sitting outside the control of any one person or company, continuing to run as designed and remaining open to anyone who wants to use it.*  @Jeff Amico

We want to help Rocket Pool get to its end result of becoming a public good resource that enables anyone to stake ETH with their own private keys securely in a decentralization and trustless manner.

To get there, we’re channeling the hunger for knowledge of blockchains in students today along with the support from visionary professors to enrich the Rocket Pool community with more expertise and knowledge than we can provide on our own.

Beyond supporting Rocket Pool with new ideas and talent, we want to also help guide open-minded individuals who are willing to put in work to receive experience and opportunities available nowhere else.

When I was in university, some ~10 years ago, I had only been exposed to crypto via the Silk Road and Bitcoin pizza memes with the same vibes as this Salem Ilese NFT; (side note and humble brag, I own one of her Crypto Boy NFTs that originally supported women’s rights and now secondary sales support the artist #iykyk).

Rocket Pool Token Delegation

Now to the good stuff. Here is how we are rolling out our token Delegation program with continuous iterations.

Today, we have the skeleton for the thriving ecosystem of token delegates that we foresee ahead. What this means is that we currently have three token delegates, one for each university that is voting on each Rocket Pool proposal via our own Snapshot voting page.

Monthly our teams meet to review our research on the latest upcoming proposal for Rocket Pool and then we vote on-chain with the results of the token delegates' decisions.

• Here is the University of Cincinnati’s lead token delegate @regexbuster's analysis of Rocket Pool’s current open proposals.

• Here are StakeRocketPool’s monthly meeting notes for our Rocket Pool token delegation program.

We take these on-chain vote results and then we vote on-chain on Rocket Pool’s own voting page.

Eventually, we will move towards the 100% full token delegation, but to start we are taking baby steps. Any and all feedback is appreciated on how we can improve so please do share with us if you have any thoughts.

What’s Next

We plan to keep improving upon our token delegation program and onboard more delegates over the next quarter.

Our token delegation program also aims to improve governance decision-making in the Web3 and DeFi ecosystems, contributing to the development of a more decentralized and inclusive financial system.

We aim to strategically empower as many open-to-work students as possible so that we can scale hands-on learning and professional development experience for undergraduate and graduate students interested in Web3 and blockchain technology.

Please reach out via our Twitter or via our website’s contact form to apply to participate yourself or recommend your university to get involved with shaping the future of Ethereum, aka ultrasound money, along with us.

https://ultrasound.money/

Thank you.

Many believe that this regulation is good for DeFi, bad for CeFi, as more investors will move to self-custody opportunities through liquid staking protocols like Rocket Pool.

Today there is no ban on staking-as-service products for US investors and no staking products have been approved by the SEC so technically there is a gap in regulation for Liquid Staking Protocols and products. 

Here’s the Steak according to the US Government

On February 9th, 2023 the rules and regulations for staking services for US investors changed when the US SEC issued new guidance and a $30m fine to Kraken, the second largest exchange in the USA. Kraken is no longer able to provide staking services effectively immediately and all US exchanges or cryptocurrency businesses that provide staking services must be registered with the SEC and provide full disclosures to investors to follow the current guidance from the US government for US investors.

This news sent massive FUD (fear, uncertainty, and doubt) through global crypto investors' minds regarding the potential ban of staking services for US investors. What do these new guidelines mean for DeFi and liquid staking service?

There is now growing concern among investors about the US regulators’ desire to stop investors from accessing crypto products and services and potentially ban crypto. Our thoughts are that until the US banks can get in the crypto products and services industry with clear regulation from US policymakers then retail investors in the US will be able to access crypto products and services.

Even when the SEC's own leadership disagrees on this recent enforcement and indirect new regulation update for US companies offering staking products and services, the rules now apply to all staking providers for US investors.

“Instead of taking the path of thinking through staking programs and issuing guidance, we again chose to speak through an enforcement action, purporting to “make clear to the marketplace that staking-as-a-service providers must register and provide full, fair, and truthful disclosure and investor protection.”* *****@Hester Peirce **

In this article, we will explore the implications of a potential ban on staking-as-service products for the largest centralized entities, as well as for non-custodial Liquid Staking Protocols.

First to catch you up if you missed it, without warning the SEC, US regulatory body for securities (aka most investments) issued a judgment to the 2nd largest US cryptocurrency exchange Kraken to stop offering staking services immediately and pay a $30,000,000 fine. Outrage and panic ensued as leading companies like Coinbase and other regulatory leaders fired back harsh feedback, but regardless, they will have to comply with the new regulation of registering with the SEC to offer staking services.

Here is the summary of the leading crypto lobbying group for US cryptocurrency exchanges and venture investors. 

***“The SEC continues its attack on U.S. crypto companies and retail investors, regulating by enforcement and undercutting the potential of public blockchain networks in the United States”* -Kristin Smith, Blockchain Association’s CEO, **

Kristin then continues to echo what we see is the key narrative ahead focused on freedom with DeFi and access to innovation. 

 “Staking is an important part of the crypto ecosystem, allowing individuals to participate in decentralized networks and giving investors more options to earn passive income. 

**Today’s settlement isn’t law, but is another example of why we need Congress - not regulators - to determine appropriate legislation for this new technology. Otherwise, the US risk driving innovation offshore and taking online freedoms away from individual investors” -Kristin Smith on February 9th, 2023 @BlockchainAssn **

While this is quite negative news for centralized staking service providers, we see this new guidance as a positive sign for Rocket Pool and DeFi liquid staking protocols that already follow the current guidelines of full disclosure and do not involve the custody of investors’ assets. 

Rocket Pool is a distributed and decentralized network and this is a competitive advantage with the new guidelines. Let’s dive into why Rocket Pool, as a DeFi-enabled globally distributed network, is different from centralized staking providers.

What does this mean for Rocket Pool and (Liquid Staking Protocols)?

Liquid staking protocols such as Rocket Pool that are built on top of an open permissionless blockchain (Ethereum) are now more important than ever. 

Now the disclaimer: we are not legal experts, and we have not talked to our legal counsel yet on this topic. We are not 100% certain of the requirements of liquid staking protocols to meet US investor requirements, however, we are clear that Rocket Pool is a different type of network that requires different legislation than centralized service providers and here’s why.

Why is Rocket Pool different from Kraken and centralized staking providers?

Rocket Pool is DeFi, Kraken is CeFi.

Rocket Pool is built on top of Ethereum’s vibrant DeFi ecosystem and is a community-driven project that is pushing for more decentralization, diversification, and self-custodial design. The Rocket Pool protocol is principally made to allow people to participate seamlessly in Ethereum’s innovative consensus mechanism in a liquid manner.

DeFi is open and permissionless, solving the many problems that CeFi causes with intermediates that can trick or deceive investors. Defi is 100% transparent and was built to fix the issues with CeFi. 

In fact, DeFi has support from some of the US’s leading legislative leaders in Congress, with Rep. Tom Emmer led the way to push for DeFi access for all US investors while highlighting the issues CeFi creates, with FTX as the worst example yet. 

“Decentralization is the point.” @Tom Emmer

The Rocket Pool is not a centralized staking provider or entity, rather it is a distributed network of individuals and groups working together over the internet with transparent reporting that anyone can collect at any time.

We do not yet know of any new guidance for liquid staking protocols like Rocket Pool, however, it appears to be clear that centralized custodians now have potentially unobtainable requirements since the SEC requires registration and they have not registered one crypto token or staking product yet.

What do the new Staking Services Requirements mean for centralized staking providers like Coinbase, Binance, and others?

Centralized staking service providers will most likely need to register each product with the SEC to continue to offer the staking services. Coinbase argues here that staking is not a security, however, without clear regulation from Congress on how to treat digital assets such as Ethereum, and other PoS cryptocurrencies. 

If a ban on staking-as-service products were to be implemented, it would have significant implications for the largest centralized entities in the industry. A ban could also lead to increased competition from non-custodial Liquid Staking Protocols, which may be better positioned to provide staking services without the same level of regulatory scrutiny. 

What’s Ahead for Centralized Liquid Staking Providers to US Investors?

Liquid Staking Providers that are hybrids of centralization on top of DeFi such as Coinbase and Lido are now questioning their responsibilities based on the new US SEC requirements. Here are some of the questions we can imagine expert crypto lawyers are now answering from centralized staking providers: 

• Do Liquid Staking providers have to follow the same requirements as centralized staking service providers like Kraken?

• What are the requirements to offer staking services or products to US investors? 

• Could DeFi-enabled networks like Rocket Pool be different?

It is our understanding that no one officially knows the answers to the above questions, however, we believe, along with many others, that Rocket Pool and others like Swell Network are different and require new legislation that is based on their DeFi-enabled architecture.

Are there any leading indicators in the markets for global investor preference of Liquid Staking Services and LSDs?

Time will only tell, we can see that in the short term, the markets have already started to price in the expected growth and value accrual of the top Liquid Staking Protocols.

The markets take time to reflect new information and we believe we will continue to see an increased demand for liquid staking protocols on top of DeFi that are trust minimized and operate autonomously without a central entity, like Rocket Pool’s rETH, which continues to maintain a premium in the market due to its superior architecture.

To learn more about current market dynamics, watch this video on Why rETH trades a premium

Let’s Summarize

In conclusion, a potential ban on staking-as-service products would have significant implications for the largest centralized entities in the cryptocurrency industry, as well as for non-custodial Liquid Staking Protocols. While a ban could lead to increased competition and opportunities for non-custodial protocols, it could also lead to additional regulation from the SEC that limits non-custodial Liquid Staking Protocols offered to US investors as well. 

Ultimately, the future of staking-as-service appears to lean towards non-custodial protocols and qualified custodians, or traditional banks, as the primary winners that can provide more secure and trustworthy products for US and global investors. 

Thanks for reading!

P.S. Long live DeFi and we hope you consider taking action to reach out to your legislator to advise them on the importance of DeFi access for all. Here’s an additional read on this topic check out Jake Chervinksky’s Tweet thread** here.**

TL:DR; Acquiring Ethereum under $2,000 and staking via self-hosted nodes or LSDs are the best opportunities for long term web3 investors in Q1 2023.

We believe staked Ethereum ($ETH) will become the default web3 interest rate in the next cycle. To diversify outside of staked Ethereum, we are acquiring RPL to include the leading decentralized staking-as-a-service provider for Ethereum today.

Why staked $ETH?

Ethereum is the most profitable crypto ecosystem today with $3.3B in revenue generated over the last year. Ethereum and the Ethereum compatible (EVM) ecosystems have a competitive advantage with the most developers, total value locked (TVL), and infrastructure today to assist in onboarding the first billion users to web3.

Ethereum’s upgrade to PoS last year helped turn $ETH into an ESG asset that is 99% more sustainable.

With the upcoming ETH2 unlock in March (TBD official date), the demand for $ETH is expected to increase as risk prone investors now will have a guarantee they can get their locked $ETH back after ~27 days. The ‘risk-free’ variable rate of 2-11% return in $ETH for staking will help drive global investors to allocate to $ETH more than any other high-risk crypto asset in our view.

Staked Ethereum’s yield (akin to a dividend), traditional financial metrics growth (ex. revenue & users), along with the ESG stamp (climate friendly approved) will attract large and small investors alike globally once more regulation is clear that Ethereum is a commodity and regulations are clear in each jurisdiction for how investors can get access to staked Ethereum.

How to estimate $ETH’s value?

A valuation models for $ETH that could make sense one day for traditional investors is to compare Ethereum to a bond. With the bond analogy, the estimated value of $ETH could be easily be 6 to 7 figures according to this analysis by Arthur Hayes.

Others, have compared $ETH to a FinTech payment network to find a suitable valuation model.

According to some analysts, like Squish in this overly bullish report, we can use the payment networks of today as a comparison for Ethereum’s valuation.

If just last quarter (Q1 2021) Ethereum settled 6.4x the transactions of PayPal and PayPal’s market cap is $310B*, then unless Ethereum extracts far less value from each transaction than Paypal, it ($ETH) should be worth at least $1.8T or around $16,000 as a base case.*

Standard Chartered, a UK bank with $800 Billion under management, predicted in their cryptocurrency research report that Ethereum could be worth “$26,000-$35,000 range” over a longer term.

Regardless of how traditional investors value Ethereum, the ecosystem’s revenue and growth will most likely manifest the ETH $10K meme sooner than most anticipate.

Show me the Money - Ethereum’s Revenue is #1

The largest cryptocurrency, Bitcoin made $0 in revenue over the last year, while Ethereum made $3.3B. The closest competitor, the #2 largest smart contract ecosystem (BSC), made only 1% of what Ethereum earned over the last year at $39.6M.

There is no comparison to any other cryptocurrency asset today in terms on demand for Ethereum’s services (access to the global value transfer network).

The largest competitors today based on revenue generated are NFT Marketplaces that run on top of Ethereum and other blockchains. See Token Terminal’s Revenue dashboard to dive deeper into the most important baseline financial metric for web3 assets.

Additional Ethereum metrics to follow are active developers, TVL, and the price to sales (P/S) ratio.

Now stepping beyond Ethereum and to protocols and software communities making Ethereum staking easier.

Diversify Staked Ethereum with Rocket Pool.

With conviction that staked Ethereum is the best opportunity right now, here is a simple way of putting the Pareto principle into action with 80% of the investment allocation put into staked Ethereum and the remaining 20% into Rocket Pool, a protocol supporting staked Ethereum and decentralized Ethereum.

• 80% Staked Ethereum - Rocket Pool Mini Nodes and/or rETH

• 20% LSDs - Rocket Pool RPL

Learn about why you’d want to invest with Rocket Pool via rETH here instead of competitors like Lido or Coinbase.

How Would we Execute this Opportunity?

Good question. This is where the real work comes into to play from our perspective. To take advantage of this opportunity we would slowly deploy assets over 1-6 months based on market indicators. Once we have acquired our assets we would stake and sit for five to ten years. Yes, that’s right, locking up the assets until 2027 or 2033.

What are the Risks of this Opportunity?

The risks are abundant and the advice we live by is that if we can’t lose it we don’t invest it. Now ten years into the cryptocurrency markets, we believe a lot of the regulatory risks have been cleared away (but not yet put into law) and the major risks for us are smart-contract and hacker risks.

The good news is that there now are insurance options now available via Nexus Mutual and others who are decreasing the smart-contract risk for DeFi investing. To decrease our hacker risks, we choose self-custody through hardware wallets. Operational security and self-custody are important to decrease the risks with Ethereum staking via self-custody.

On the regulatory risk side of things, we are feeling pretty good that Ethereum will be declared a commodity by the US regulators, as hinted here and by experts here, when the US finalizes cryptocurrency regulation in 2024 or 2025. Our bet is that the US follows the EU with their MiCA regulation (which has been postponed, and excludes DeFi, but is progress to clear regulation).

What’s the Net/Net?

“You have to work hard in the dark to shine in the light.” – Kobe Bryant

Consider diving deeper into the suggested resources here and decide if you have enough conviction to move forward with this opportunity. Most will pass up on this generational wealth opportunity because they didn’t work hard enough to learn and understand what’s really going on with cryptocurrencies behind the fraud, scams, and stories of the extremes on both sides of the story.

We believe that compounding Ethereum via staking has the highest chance of return with the least risk in the entire Web3 and cryptocurrency public landscape.

We plan to earn with our mind and not just our time. We hope you consider doing your own research to see if staked Ethereum with Rocket Pool could be your answer to earning with your mind and not your time.

Thanks for reading.

This is not financial advice. This content is for informational purposes only. Nothing contained here constitutes a solicitation, recommendation, endorsement, or offer by StakeRocketPool or DYOR Collective LLC to buy or sell any securities or other financial instruments in this or in in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction.

First on crypto’s future (as a technology). There is some consensus amongst researchers and experts on how blockchains will scale to service billions of users 24/7/365. One leading theory is laid out in the Endgame research article by Ethereum’s co-founder Vitalik Buterin.

When considering the long-term value offering of decentralized finance and composable finance, Liquid Staking Derivative tokens stand out as an elementary and critical piece to the puzzle.

Rocket Pool’s $rETH token is a solution for a collateralized and decentralized Ethereum LSD. rETH has the potential to be a pristine Web3 asset and here is an introduction to why.

The End Goal is the Endgame

To start, first a little context on the title ‘The Endgame’. The lead founder of Ethereum, Archangel Vitalik Buterin, coined the term ‘Endgame’ in the blockchain space with his research piece on scalability.

Endgame by Vitalik Buterin - TL:DR: Here is a list of the requirements for a      blockchain ecosystem that is acceptably trustless and censorship-resistant.

A quick summary of his research is that multiple layers of blockchains will be required to power the needs of Web3’s demands. Ethereum’s goal is to remain the base layer for Web3 commerce as the #1 security and data availability ecosystem.

Taking this a step further to real-world applications, like Decentralized finance and investing, check out this infographic with the applications built on top of Ethereum.

Ethereum is the foundation that enables trust networks for every blockchain, product, or application within the DeFi global economy. Now Ethereum is still very early in it’s the evolution to a global trust network that billions of individuals can use every day.

For the Ethereum ecosystem to reach billions of users, the speed and cost of using the services on top of Ethereum have to go down to be competitive for all types of users. There are many groups and individuals working on scaling Ethereum with new blockchains and technology using the ideas in Vitalik’s post.

If you want a fantastic deep dive on Ethereum’s progress toward its endgame see this article.

https://theknower.substack.com/p/scaling-modularity-and-the-question

Now, how does the future of blockchain scaling relate to a term LSD which is often associated with psychedelic drugs?

We believe that liquid staking derivatives of Ethereum will be a bedrock asset in global financial markets ahead and help user in new large-scale investors.

LSDs as the Endgame for Institutional Investors

We believe that liquid staking derivatives tokens will be a part of the endgame strategy for large global investors in Web3. Liquid staking derivatives are Defi in its purest form and LSDs have the potential to be the base layer of natively digital assets in Defi.

Why are LSDs so awesome?

LSDs provide users with all the benefits of self-staking without the associated risks and complexities. It turns out, most investors want “set-it-and-forget-it” opportunities that provide passive income with little to zero effort and low risk.

To stake Ethereum and earn a ‘risk-free’ rate of return for securing the network, there is too much risk and work for the average investor.

To de-risk and simplify the earning passive return on Ethereum’s native asset $ETH, new protocols and companies have been created to service the market demand for liquid staked $ETH.

Liquid-staked $ETH differs from direct staking in that the assets are not completely locked up. With Rocket Pool, users can stake 1 ETH and receive 0.95113 rETH (as of this writing) and use the rETH within DeFi to lend or leverage their assets.

*               Quick caveat - Why not exactly 1 rETH for every 1 ETH?*

Good question. rETH is actively earning passive income via the staked Ethereum in their network and thus their staked ETH asset continues to go up in value in Ethereum-denominated returns.

Back to LSDs and how they work.

At a high level, LSDs operate on a mint-and-burn 1:1 ratio. Stakers receive liquid staking derivatives in exchange for staking their assets, representing their claim on the underlying stake pool and its yield.

With Ethereum Investors, users lock up their $ETH, generating a passive yield, and then a new liquid asset $rETH is made available for use in DeFi. This gives investors two avenues for generating income.

LSDs balance risk, reward, and сonvenience for investors. I believe that Ethereum’s decentralized ETH staking protocols will lead the way in unlocking new forms of composable finance with trillions of dollars of value flowing through the global ecosystem. LSDs enable investors to achieve new risk/reward ratios that today’s capital markets just can’t offer.

To give a comparison to today’s markets. The average investor like myself cannot go buy a government bond (ex. US10Y) and then borrow against it to provide liquidity in DeFi to earn additional passive income.

We believe the future will demand composable finance where investors can have it their way. Investors will want to earn passive income in a variety of ways that native assets like staked ETH cannot provide.

Now if you’re still with me, let’s dive into the leading LSD options today for Ethereum investors.

Ethereum LSD Options - Pick Your Trade-Offs

Here is a summary of the Ethereum LSD options today.

In our view, the key requirements for a pristine Ethereum LSD include:

• Permissionless & Open Source Code - The true web3 ethos

• Trust minimized counterparties - Cut out the middlemen and deal with code instead of human actors when possible

• Fully collateralized - Eliminate the chance of a run on the bank or inability to pay back investors

These requirements lead us Rocket Pool’s $rETH solution. We believe other investors will also have similar requirements and this will lead to more demand for Rocket Pool’s self-custody, decentralized, collateralized, and trust-minimized offering in $rETH.

rETH’s Status Today in Ethereum LSD Growth

With ~3.2% of the global Ethereum LSDs market today, Rocket Pool has grown to a top Ethereum LSDs in a little over a year. The #1 leader Lido has grown quickly due to its early launch and compelling offering with stETH. In #2 is Coinbase and then in #3 is our friendly decentralized solution by Rocket Pool with rETH.

We estimate rETH to continue to grow in market share over the next few years as more investors prefer a decentralized and fully collateralized Ethereum LSD.

We believe that liquid staking derivatives will be the foundation of composable finance for global investors ahead.LSDs are an essential part of DeFi’s endgame and we believe Rocket Rool’s rETH will be a part of this endgame.

Thanks for your time.

Additional Resources

• Check out the rETH introduction here

• See here for the Eth2 liquid staking balances chart above and more analytics on Ethereum LSDs.

• See here for a research article on the different Ethereum LSD competitors and why rETH will win.

This is not investment advice. Web3 investments involve risk, please do your own research.

• The history of the internet leads us to believe that the future of the internet’s value layer will be decentralized and trust minimized.

• Rocket Pool is helping make this happen with a lower barrier to decentralized self-staking of Ethereum, the most important web3 asset.

We believe the internet’s future will be based on open-source software (crypto networks) that are permissionless and enable access to global markets 24/7/365. Entrepreneurs and developers building open-source software will prefer to use crypto networks with high security and trust standards.

Ethereum’s ecosystem is the most important crypto network today partially because it has the most value locked up ($23B as of this writing) and is the most decentralized blockchain (7,578 nodes as of this writing). Ethereum’s future depends on maintaining decentralization and Rocket Pool is focused on helping make this happen.

Here is why decentralization matters in the evolution of the internet and why Rocket Pool is leading the decentralization of Ethereum.

A Quick History on the Internet

a16z is one of the best venture investment firms in the world and their crypto lead Chris Dixon shared his thoughts ‘Why Decentralization Matters’ in this acclaimed article.

Here’s an excerpt on the history of the internet’s evolution from an open ecosystem to today’s gated internet led by a few mega companies, and what could be ahead if history is to rhyme ahead.

"The first two eras of the internet

During the first era of the internet — from the 1980s through the early 2000s — internet services were built on open protocols that were controlled by the internet community…

During the second era of the internet, from the mid 2000s to the present, for-profit tech companies — most notably Google, Apple, Facebook, and Amazon (GAFA) — built software and services that rapidly outpaced the capabilities of open protocols…

The good news is that billions of people got access to amazing technologies, many of which were free to use. The bad news is that it became much harder for startups, creators, and other groups to grow their internet presence…This in turn stifled innovation, making the internet less interesting and dynamic.

Centralization has also created broader societal tensions, which we see in the debates over subjects like fake news, state sponsored bots, “no platforming” of users, EU privacy laws, and algorithmic biases. These debates will only intensify in the coming years.

“Web 3”: the third era of the internet

The internet is the ultimate software-based network, consisting of a relatively simple core layer connecting billions of fully programmable computers at the edge. Software is simply the encoding of human thought, and as such has an almost unbounded design space…

*The internet is still early in its evolution: the core internet services will likely be almost entirely rearchitected in the coming decades. This will be enabled by crypto-economic networks, a generalization of the ideas first introduced in Bitcoin and further developed in Ethereum. *

Crypto networks combine the best features of the first two internet eras: community-governed, decentralized networks with capabilities that will eventually exceed those of the most advanced centralized services.

How decentralization wins

Software and web services are built by developers. There are millions of highly skilled developers in the world. Only a small fraction work at large technology companies, and only a small fraction of those work on new product development. Many of the most important software projects in history were created by startups or by communities of independent developers.

“No matter who you are, most of the smartest people work for someone else.” — Bill Joy

Decentralized networks can win the third era of the internet for the same reason they won the first era: by winning the hearts and minds of entrepreneurs and developers.”

We agree with a16z and Chris that the hearts and minds of fellow entrepreneurs and developers will continue to migrate toward web3.

Web3, crypto networks, unlock property rights on the internet for users and provides more value creation, innovation, and opportunity than ever possible in Web2.

The Web3 future enables anyone to be able to engage on the internet and own their data so that they can monetize the value they create in their communities and in global markets.

Web3 is a collective of individuals working together anywhere in the world on a shared missed. Rocket Pool’s team decided to tackle the problem of centralized Ethereum staking, and we think this is one of the most important projects we can support to ensure we maintain a decentralized Ethereum ahead.

We could go a lot further down the decentralization deep dive, but will hold back and suggest reading any of these great articles to go further:

• The Meaning of Decentralization @Vitalik Buterin

• Coordination, Good and Bad @ Vitalik Buterin

• Measuring Blockchain Decentralization @ Consensys Research

What’s Rocket Pool again?

Rocket Pool is the friendly decentralized Ethereum staking protocol, aka a crypto network that makes Ethereum staking easy for many types of investors.

Here’s a summary by AllNodes CEO on Rocket Pool’s value offering:

“To fully grasp the power of the Rocket Pool protocol, it is imperative to understand staking. Staking is a form of passive income available to self-sovereign individuals or crypto investors on centralized and decentralized crypto exchanges and staking platforms…

to become a validator on the Ethereum network, one needs a substantial amount of collateral…this is not very inclusive.

Luckily, another concept democratizes the process of staking Ether for investors – the Rocket Pool (RPL).

Rocket Pool is a community-owned, fully decentralized staking protocol that supports investors, big or small. It is designed for easier self-sovereignty…(and) may not require extensive technical knowledge to run a node or a big wallet.

The Rocket Pool protocol is for two types of investors, those who wish to remain liquid and stake small amounts of Ether without being bound by uncertain lock-up periods and investors with at least 16 ETH looking to maximize their ROI and stake to become a validator. @Kontstantin Boyko-Romanovsky

Rocket Pool enables smaller investors to run their own ETH2 node and this reduces the barriers to entry. Here is a map of Rocket Pool’s ETH2 nodes today:

By reducing the entry barrier for long-term investors who want to be independent node operators and or stakers, Rocket Pool provides two products that support Ethereum’s validator set to grow more diverse and decentralized, making the network more secure, robust, and censorship-resistant.

Rocket Pool’s Impact on Decentralized Ethereum Today

Rocket Pool today has 2% of the Ethereum validators on the network while providing 16% of the decentralization of the network according to SuperPhiz.

This fact that Rocket Pool is providing more decentralization than it’s share of the network is an incredible feat considering that most users are assumed to choose the easiest option and that’s often from a centralized service. This a pretty big deal to us and to those who understand the importance of a censorship-resistant Ethereum.

Like other true crypto believers, our hearts are aligned with the developers and entrepreneurs who started the Web3 movement that matters and it’s essential for the future that we want to be a part of.

“I will always support decentralization since it is the ethos this industry is built on…Rocket Pool is a net plus for the benefit of Ethereum and hopefully, the growth continues” @Data Driven Investor

It’s important for us to support the decentralized Ethereum staking protocol over the centralized options like Lido due to the inherent issues centralization creates. For example, OFAC Compliance and Lido’s role in the Ethereum ecosystem.

In Summary

The decentralization of the internet is the most likely path forward if history were to not repeat but rhyme in our view. Web3 provides more value for creators in the form of property rights and ownership of the network. We expect more entrepreneurs and developers to choose Web3 over Web2 due to the value unlocked by crypto networks.

Over time we’ve seen the Internet start out as open, permissionless, and free and move to gated communities run by multinational corporations. The founder of Bitcoin, Lord Satoshi Nakmoto, created Bitcoin in part to protect peer-to-peer commerce as they knew the sins and evil that can occur when a few hold the power.

In our short history of the internet’s existence, we’ve come to quickly learn that the decentralization of power and ownership is the best way forward for a censorship-resistant and open global economy on the internet.

Rocket Pool is the leading Ethereum staking protocol that supports decentralized and at-home staking easily and securely. By supporting Rocket Pool and owning $rETH or running a mini node, individuals can put their beliefs where their wallets are by leaning into supporting a decentralized Ethereum owned by the people around the world.

Thanks for your time.

Rocket Pool is making at-home decentralized staking of Ethereum easy for everyone and this is a big deal. First, how we got here.

We are of the belief that Ethereum and Ethereum Virtual Machine ecosystems are the most important web3 building blocks. We also believe that decentralization is required for any base Layer 1 blockchain. Blockchains like Ethereum provide a trust network that offers a censorship-resistant economy on the internet to anyone.

Once we came to these conclusion that we decided we should figure out how to support Ethereum with decentralization.

With some research and talking to friends, we found out about Rocket Pool, the “friendly decentralized Ethereum staking protocol”.

What does this value proposition of the “friendly decentralized Ethereum staking protocol” even mean?

Rocket Pool is focused on reducing the barriers to staking Ethereum for any size investor anywhere in the world.

Ethereum holders (long-term investors) can earn an Ethereum network risk-free rate of return by locking up their $ETH. To ensure network safety, 32 $ETH is required to stake Ethereum on your own with an independent Ethereum staking node.

Not many people can afford 32 $ETH to run a full node. Rocket Pool has lowered this barrier to 16 $ETH and soon will lower the barrier to 8 $ETH for independent Ethereum staking node. Rocket Pool figured out how to lower the barrier to at-home staking without decreasing the security of Ethereum.

Rocketpool’s novel solution ensures Ethereum’s security thresholds are met with less $ETH locked up. This innovation along with their liquid staking derivative product $rETH in combination provides a unique value proposition to global investors.

Stepping back, here is an introduction to Rocket Pool and then links to suggested references to dive deeper down the rabbit hole.

Rocket Pool’s Genesis

Back in 2016 this idea was conceptualized by Vitalik Buterin, the visionary founder of Ethereum, as a solution to lowering the barrier to entry for small investors to be able to secure the network through independent staking.

This idea became the Rocket Pool open-source software project with the mission of decreasing the barrier to a decentralized and secure PoS Ethereum, aka ETH2.0 which we have today post The Merge.

Rocket Pool has the first-mover advantage in decentralized Ethereum staking and an innovative offering that has no central counter partner, just smart contracts running on top of Ethereum.

Here is a summary of how Rocket Pool makes their sausage at a high level.

Rocket Pool’s Value Offering

Rocket Pool offers three main value propositions to investors looking to stake Ethereum.

1. Lower entry to staking $ETH at home.

   1. Launch a Rocket Pool Ethereum node with 17.6 $ETH instead of 32 $ETH.

   2. Stake Ethereum through rETH with tokenized staking. Convert 0.1+ of $ETH to $rETH and stake Ethereum.

2. Stake Ethereum from your own hardware wallet anywhere in the world safely in your own custody.

   1. Keep your keys and your crypto while earning interest.

3. Decentralized governance with no central counterparty.

   1. All of the code is on-chain and the community is an intelligent group of developers, investors, hobbyists, and educators who are promoting a permissionless decentralized Ethereum through their DAO.

Why should you care?

Some analysts and investors like us believe that Ethereum will set the default web3 return rate. Raoul Paul coined this term earlier this year on The Scoop podcast. You should have a full listen, but if you don’t have time, the summary is that $ETH’s staking rate will most likely become the most important risk-free rate of return in web3.

*“We are going to end up creating a benchmark web3 interest rate of which we can assess other risks against, so that makes risk management slightly more transparent.” @Raoul Paul *

Staked Ethereum is now predicted to be the most important web3 digital asset. Move on over $BTC, albeit you are the largest, oldest, and most liquid cryptocurrency, the facts that the Bitcoin ecosystem is slow-moving and compared to ‘digital gold’, the Bitcoin value network has a limited market potential.

Ethereum the #2 cryptocurrency on the other hand is a fast-moving, ESG-friendly ecosystem built with composable finance and user-owned content (property rights) as two leading industries for global digital economies. Ethereum is thought of as ‘internet money’ to some and to crypto enthusiasts, Ethereum is known as ultrasound money and it is the platform for a new global economy built on a user-owned internet (aka at-home $ETH stakers through Rocket Pool).

We also believe that Liquid Staking Derivates (LSDs) are the future of Ethereum staking and Rocket Pool is the #1 leading decentralized LSD provider today with rETH.

In the Ethereum Liquid Staking Derivates vertical, rETH is the #3 leader, significantly behind Lido Finance’s stETH and Coinbase but far ahead of any other decentralized option.

In the last three months “Rocket Pool has experienced the greatest percent growth since The Merge out of any liquid staking derivative (LSD), entrenching its position as a legit contender for LSD dominance.” @Messari.

Rocket Pool is a leader in both the Ethereum decentralized staking and liquid staking tokens verticals. Their early mover advantage in both niches is a great sign for what’s to come ahead as they continue to innovate as more users onboard to their ecosystem.

What’s Ahead for Rocket Pool?

The Rocket Pool team is developing new solutions that reduce the Ethereum staking threshold and unlock new business models for entrepreneurs within the ecosystem.

• “Rocket Pool’s user base looks primed to grow, especially as the scalability roadmap continues to offer new products and services for ETH stakers, including less ETH bonded minipools (LEBs), staking-as-a-service (SaaS), and solo staker migration.” @Messari

• LEBs are minipools that only require 10.4 $ETH to stake a node instead of 17.6 $ETH for a full Rocket Pool node and 32 $ETH for an independent full Ethereum node.

• Staking-as-a-Service (SaaS) offering will enable entrepreneurs to grow the Rocket Pool ecosystem by providing staking services to other users on the internet.

• Decentralized Finance (DeFi) opportunities to earn a yield with rETH. DeFi is in need of pristine digital collateral and staked Ethereum is expected to be one of the best collateral options outside of $BTC or stablecoins.

Call to Action

Collect this post if you want to be included in future Rocket Pool education and opportunities.

All are welcome, few will act, and the hope is that more take action to become educated enough to join the community with us!

Additional Resources to Dive Deeper

This is just the tip of the iceberg on this topic of our love and support for Rocket Pool. Here are some great resources to dive deeper:

• Rocket Pool Docs - Introduction (Documentation)

• Rocket Pool Discord (Chat)

• Rocket Pool Community Hub

• Rocket Pool Staking Protocol - Part 1 (Blog)

• Overview of Rocket Pool and RPL Token Valuation (Blog)

• Rocket Pool Investment Thesis (Blog)

• The Bull Case for Rocket Pool (Youtube, @Bankless)

• Rocket Pool Daily Updates (Youtube, @Rocket Fuel)

• Rocket Pool Community Dashboard (Analytics)

• Pop, Lock, and Rocket (Paid Research, @Messari)

• RocketPool NFTs (Community Artist @Unvetica.eth)

Onwards and upwards friends!

Thanks for your time.

P.S. What do you think of our profile picture (pfp)? This is our team’s mascot, Sheena Cassie Na, Rocketeer #3412. With Sheena as our mascot, we are reppin’ the Rockeeter community. Feel free to join us by acquiring one or learning more here.