Proposal: Priority deposit pool for bundled rETH + RPL purchases
The protocol design has focused RPL around node operators. Whilst speculatoors and rETH holders are free to buy RPL if they wish, they have no special incentive to do so, except for expectation of rising token prices - which is currently not a majority position.
The aim of this proposal is to broaden the target audience for usefuleness of buying RPL to rETH buyers, many of whom are probably as sympathetic/loyal to Rocketpool as a protocol as the node operators. They should also be incentivized to buy and hold RPL.
The proposed mechanism would be a stand-alone smart contract solution for a parallel deposit pool, in which rETH can be bought at a discount to market price by bundling the rETH minting transaction with an RPL buy. It should also provide priority over the regular “pure rETH” deposit pool, i.e. have higher capacity and being used for the creation of new minipools first (in front of the regular DP). ETH in the priority DP could optionally reduce the capacity of the regular DP, if we wanted to limit the impact on total idle ETH. The RPL bought in this way would have to be locked up for a defined period in order to prevent immediate selling.
Without proposing a definitive formula to calculate the discount, it should have the following parameters as inputs:
- Fullness % of regular deposit pool (if empty, discount should be zero)
- Ratio of RPL to rETH committed to buy in the transaction
- Duration of committed lockup
I can do some basic modeling to propose a formula if the proposal is seen as generally useful.
The maximum discount may or may not exceed the market premium:
Option 1: Max. discount limited to premium. In the optimal case (i.e. with highest RPL + lockup commitment), an rETH buyer can buy at the fair rETH value instead of the higher market price, but not below.
Option 2: Discount can exceed market premium. By committing more RPL, a buyer can lower their rETH entry price below fair value. TBD where the subsidy should come from.
Benefits:
RPL becomes useful for rETH holders by buying them priority for minting. Widening the audience for useful RPL holdings increases the expectation of rising RPL prices. Rising RPL prices increase the ability of NOs to launch more minipools.
Can mostly be bolted onto the current protocol mechanisms without having to make changes to more fundamental parameters of tokenomics.
Can be combined with other ideas.
Drawbacks:
Priority deposit pool would further deprioritize the regular deposit pool, making it even less available. Eventually, it could also be scrapped in favor of one deposit pool that always bundles rETH + RPL, but with the option of requiring zero RPL purchase when there is enough space. This would probably incur higher gas costs for minting than the current deposit pool.
Forcing rETH buyers to buy RPL as well may be seen as coercive, but it is no worse than not being able to mint rETH at all due to lack of node operators.
Requires smart contract development, audits etc.
Further research
- Feasibility of functionality in a smart contract.
- Required reliable market price oracles for rETH and RPL.
- Find reliable source (market) for required RPL buys.
- Possibility to put the locked-up RPL to better use, e.g. in a vault from which node operators who do not want to buy RPL themselves can borrow for a fee; challenges: slashing risk? what happens when vault runs dry? complex → find third party who can provide most of the functionality to integrate with
Implementation ideas
Creation of a second interface similar to stake.rocketpool.net, but with more options to select the parameters of the bundle and directly see the resulting conditions.