Illustrated rETH insurance (16 ETH minipool)


The below content is an excerpt from my LSD comparison here, done in July 2022. I thought a visual aid might be useful to showcase the assets behind rETH.


  1. This is only applicable in the context of 16 ETH minipools. The data for average protection will change with 8 ETH and 4 ETH minipools.
  2. The data for average accumulated rewards and average node RPL collaterization ratio were accurate as of July 2022.

rETH insurance

Rocket Pool does not purchase insurance or have a fund. Due to its permissionless and trustless nature, Node Operators (NO) post collateral as insurance. Liquid ETH deposits are matched 1:1 with Node Operator’s ETH as collateral, as well as 10-150% worth of RPL.

The diagram below shows the assets behind each Rocket Pool Validator.

Assets will be used to buffer penalties in the following order (from top-down in the above illustration):

  1. Staking rewards - combination of 0.099 NO reward ETH and 0.073 rETH reward ETH
  2. 16 NO ETH
  3. 1.6 ETH to 9.38 ETH worth of NO RPL
  4. LSD (rETH) user’s 16 ETH deposit

Even lesser rewards will be deducted when withdrawals are enabled. But essentially, rETH has (9.38 + (16 + 0.1724/2)) / (16 + 0.1724/2) = ~158% of slashing insurance per validator. This variable amount can go as low as 110% if the average RPL collateralization is at a minimum of 10%.

Rocket Pool insurance model can protect against:

  • Inactivity Leak:
    • Protection of up to 25.38 ETH per validator (~79%)
  • Validator Ejection at 16eth:
    • Protection of up to 99.47% of the network value
    • Other than outstanding rewards, there is 0 loss to rETH holders in this scenario as it is fully borne by the permissionless node operators.
  • Total validator loss (black swan, highly unlikely):
    • If an entire validator is lost, Rocket Pool only protects up to 9.38 ETH (~58%) per validator using RPL. The pool will suffer a socialized loss of ~6.3 ETH out of 16.172 ETH worth of rETH issued, per validator lost.