Retrospective Award Application
Retrospective Award
Who is the proposed retrospective award recipient?
Ken Smith (NextBlock Solutions LLC; address: nextblock.eth)
What specific project or work is the retrospective award in recognition of? Please detail what the project or work entailed and the duration over which it took place.
I published a research paper entitled “A Risk Analysis of Rocket Pool Low Ether Bonded (LEB) Minipools” in May 2022. The paper can be accessed at GitHub - htimsk/LEBminipools. My work on drafting and researching the report took place from May 3, 2022, to May 25, 2023. Additionally, I had to write custom python code to extract a better dataset of MEV in POW blocks and had to adapt python-coded beacon chain validators modeling code from the LEB report. This work was performed during the majority of April.
Are the subjects of this award entirely open source ([MIT], [GPL], [Apache], [CC BY] license or similar)? If not, which parts will not be, why, and under what license will they be published?
Yes, I have added a copyright notice to the report on my public GitHub indicating that it is released under the CC BY license. This allows others to distribute, remix, adapt, and build upon the material in any medium or format as long as attribution is given to the creator. The license allows for commercial use.
Benefits - enter N/A where appropriate
How did the project or work for which the retrospective award would be given help people looking to stake ETH for rETH?
This report was crucial in informing Rocket Pool’s decision to lower the minimum bond amount for forming Low Ether Bonded (LEB) pools. It was the first in the industry to accurately quantify foreseeable risks that could harm user deposits in a pooled staking protocol. The report accurately calculated the expected loss for each scenario and determined a likely probability based on historical events. These parameters were then compared to several scenarios of minimum deposit amounts, and a risk profile was created to indicate when LSD participants (rETH holders) may incur a financial loss of funds. This report is not only useful in establishing the planned LEB pools but also in providing a thorough understanding of the risks involved.
How did the project or work for which the retrospective award would be given help rETH holders?
Currently, Rocket Pool’s (RP) capacity is limited, and it cannot generate more rETH without incurring a premium for new purchasers. The only viable method for Rocket Pool to grow its Total Value Locked (TVL) and rETH minted is to lower the bonding requirement for Node Operators (NO) while maintaining the quality of the rETH APR and minimizing reputational risks. There are a limited number of ways to achieve this, such as: Low Ether Bonded (LEB) pools, Ultra-LEB pools (with bonding less than 4 ETH), forced exits, core-protocol WC exit powers, or trusted zero ETH bonded minipools. This report analyzed and explained many of the risks associated with LEB pools. It demonstrates that creating LEB4 pools with proper feasible control measures is a viable option.
How did the project or work for which the retrospective award would be given help people looking to run a Rocket Pool node for the first time?
This report provided credibility to the financial reasoning behind creating LEB4 pools. If adopted by Rocket Pool and accounting for the minimal RPL bonding, this would represent a nearly 61% reduction in the capital cost for a Node Operator to obtain a minipool.
How did the project or work for which the retrospective award would be given help people already running a Rocket Pool node?
With the anticipated release of Atlas, it will be possible for an existing Node Operator (NO) to convert a half16 pool to a LEB8 pool. While this report does not specifically address this conversion pathway, it did help to establish the risks associated with LEB8 pools, thus contributing to the decision-making process for existing NOs.
How did the project or work for which the retrospective award would be given how does this help the Rocket Pool community?
Rocket Pool is at a critical juncture where its long-term success will be determined in the coming months leading up to and after the Shanghai hard fork. With multiple new staking pool protocols emerging on the market that offer LEB4 minipools, Rocket Pool is faced with a lack of capital assets held by its node operators. Introducing LEB pools is currently the only viable growth pathway for Rocket Pool to increase its staking capabilities. With withdrawals and solo validator conversions coming in the next couple of months, this report needed to be generated to articulate and explain the risks associated with LEB minipools.
How did the project or work for which the retrospective award would be given how does this help RPL holders?
Providing pDAO-GMC funding for research projects is crucial for ensuring that Rocket Pool (RP) continues to innovate and develop protocol features that align with and strengthen its core mission of providing a fully decentralized, permissionless, trustless, and open-source staking solution for the Ethereum network. Many of the other Ethereum staking protocols invest in their development by funding fundamental research."
Payment
How much RPL is the applicant requesting be awarded to the recipient?
I’m requesting an award of 500 RPL distributed over three periods. This number was based on discounted consultancy rates and the level of effort expended. I understand that this remuneration may be altered by the GMC depending on several factors.
Conflict of Interest
I have been approached by another staking protocol about performing risk assessments and have been invited as an initial node operator.
Does the person or persons requesting the retrospective award have any conflicts of interest to disclose? (Please disclose here if you are a member of the GMC or if you have nominated a member of the GMC for this retrospective award).
Yes. I serve on the GMC.