Lido vs Rocket Pool: Ethereum liquid staking compared before the Merge
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Data comparison of the two largest ETH liquid staking protocols ahead of the Merge: validator share, TVL, revenue, staker economics and tokenomics, with the view that decentralized Rocket Pool may gain share from Lido.
Key claims
Lido runs 128k validators, about 30% of the beacon chain, vs 1.4% for Rocket Pool
TVL: Lido over $7.1bn, Rocket Pool $556m
Rocket Pool small stakers earn 3.6% APY after a 15% commission
0/ with the #ETHmerge set to happen in <24h & marking $ETH's transition to PoS, let's have a closer look at the two largest liquid staking protocols on #Ethereum šš
š§µ on @LidoFinance & @Rocket_Pool (0/30)š
$LDO $RPL
1/ there is roughly 14m $ETH staked right now
source: beaconcha.in
2/ the beacon chain is secured by over 425k validators
source: beaconcha.in
3/ however, @LidoFinance runs 128k validators and dominates the pool distribution with a share of 30%, while @Rocket_Pool sits at 1.4% with >6k validators
source: beaconcha.in
4/ $LDO has sucked in a total of 4% of ETH supply & is by far the largest liquid staking protocol
source: stakingrewards.com
5/ but lets dive into the comparison of the two protocols
6/ in terms of market cap, $LDO is ā¼2x bigger than $RPL with a market cap of $1.1bn (vs. $560m)
source: @coingecko
7/ @LidoFinance's $stETH on the other hand has a market cap of $6.9bn compared to @Rocket_Pool's $rETH's roughly $360m (at 222k $ETH staked)
source: @coingecko
8/ but what exactly is the service that the $LDO & $RPL provide and how do they earn money?
9/ both are liquid staking protocols that allow users to stake $ETH (or in the case of $LDO also other PoS assets) and get a derivative in return ($stETH & $rETH) that is usable as collateral in DeFi & tradable, enabling stakers to stay liquid
10/ however, there are differences in how the protocols work. While in @LidoFinance its the DAO ($LDO hodlers) that operates the nodes, @Rocket_Pool is a decentralized network of #Ethereum nodes
11/ as opposed to $LDO, where decentralization starts at the DAO-level, with $RPL it starts at the node-level and anyone can run a node by staking >16 $ETH and spinning up a minipool, earning boosted rewards & comissions from stakers (see tweet 19)
source: @MessariCrypto
12/ this reduces centralization risks by design and introduces novel income opportunities for stakers ($RPL rewards & commission)
13/ but back to the data-driven part of the comparison
14/ in terms of TVL, @LidoFinance is the giant of the game with a total value locked of >$7.1bn
@Rocket_Pool's total value locked sits at $556m
source: @DefiLlama
15/ $ETH makes up $6.9bn of $7.1bn $LDO TVL. $LDO has a more diversified asset base (incl. $SOL, $MATIC, $DOT) than $RPL with a TVL consisting of 222k $ETH ($360m) & 6.5m $RPL ($195m)
$LDO has also staked significant amounts of $LUNA in the past (see chart)
source: @DefiLlama
16/ on @LidoFinance, deposits reached ATHs in Q1 this year (driven by $ETH & $LUNA) and dried up since May
the situation looks similar for @Rocket_Pool that has seen the most inflows in December 2021 and March 2022
source: @DefiLlama
17/ in terms of revenue, @LidoFinance has earned $309m in $ETH staking revenue. As mentioned above already, 10% of that (roughly $31m) goes to the $LDO DAO that operates the nodes, while 90% is supply-side revenue (goes to stakers)
source: @tokenterminal
18/ @Rocket_Pool works a bit differently, as it's a decentralized network of nodes in which everyone can become a node runner with a minimum stake of only 16 $ETH
19/ while node runners earn boosted rewards (through $RPL incentives), small stakers also pay a 15% comission to node runners. that currently leaves stakers with rewards of
- 3.6% $ETH APY (small staker)
- 4.8% $ETH APY + $RPL rewards (node oeprator)
20/ overall, this makes @Rocket_Pool more attractive to large stakers (>16 $ETH) and less attractive for small stakers (<16 $ETH)compared to $LDO
21/ interestingly, the different staking models also lead to differences in tokenomics
22/ $LDO is the governance token for Lido DAO. It is used to vote on protocol parameters & govern the constantly growing Lido DAO treasury (fed from protocol fees). It has been distributed to early stakers, team, devs & investors while the DAO treasury got allocated 36% of supply
23/ $LDO token emissions are mainly liquidity mining incentives (e.g. on Curve) that the DAO votes on every month
24/ $RPL on the other hand is not only issued to incentivize LPs on DEXes, with the majority of tokens used to boost node operator rewards in its decentralized validator network
25/ this distribution makes node runners the main $RPL holders. That makes sense as $RPL is primarily used to stake on nodes if a validator wishes to provide the network with an additional security promise
26/ node operators that stake $RPL on their node provide this additional security deposit earn an extra commission from the network proportional to the size of their security deposit
27/ also, a @RocketPool DAO will be formed in the future to allow $RPL stakers to govern important aspects of the decentralized network from smart contract upgrades to more minor changes in settings across the network
28/ since a high degree of decentralization with regards to control over staked $ETH is beneficial to the overall $ETH ecosystem (censorship resistance) & is in the $ETH community's interest, I can def see other protocols take some of @LidoFinance's market share in the future
29/ in that regard I see @Rocket_Pool in a good position as it has a sound offering (especially for >16 $ETH stakers), a focus on decentralization & quite some recognition in the space already
30/ however, decentralized protocols will likely face increased competition from centralized players such as CEXes
one example is @coinbase's entry into the liquid staking market with $cbETH
for more info see:
x.com/CoinbaseAssets/status/1562476695357358080
17 images on X
What came next Ā· since 14 Sep 2022
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This data piece reports the numbers without making a call on the token, so price moves since publication are shown as market context.
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$RPLRocket Poolbullish tone, no callā95%ā99% vs BTC
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Zero has written 2 more pieces on Lido and Rocket Pool and $LDO since this one.
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