rETH became a very popular staking derivative. So much so that rETH trades at a premium to ETH. The demand is huge.
At the same time, the deposit pool is constantly full with 5,000 ETH sitting idle and potentially more can enter until the premium on rETH is arbitraged.
This translates to the possibility of 321 new minipools waiting to be matched from Node Operators.
So we arrived at a situation the demand for rETH is high, while the supply of minipools is low ( I myself lack the ETH and RPL to spin up new pools).
This stifles the growth of Rocketpool while Lido and other more centralized staking providers can easily absorb the demand. The demand for a decentralized staking derivative is high and we should take this opportunity and offer a solid alternative.
(source: Rocket Pool Explorer )
Node Operators could easily absorb the demand, all that is needed is to lower the requirements for ETH.
I propose we lower the requirement to 8 ETH each and allow additional node operators to spin up new pools. This can scale the supply almost 2 fold. Personally, I would love to spin up more minipools and absorb the current deposit pool and demand in the market.
However, we should avoid a supply spike and rush to spin up more minipools. Therefore a gradual mechanism is needed to slowly introduce more pools.
The mechanism is as follows:
- Each currently running minipool gets the right to split one minipool into 2 after the minipool proposed a block (avoiding a rush and supply spike)
- A minipool could then be split into two minipools. That means a Node Operator can create a new minipool without depositing new ETH.
– 16 ETH Pooled, 16 ETH Node Operator → 48 ETH Pooled, 16 ETH Node Operator
– The minipools are now 24 ETH Pooled, 8 ETH Node Operator each.
– Rewards are counted after the split with the new allocation
- After a sufficient time or when new minipools spinning up has slowed, the mechanism can be lifted and each Node Operator can split their existing minipools into 2.
- After that, minipools can be created using only 8 ETH and 24 ETH that is pooled.
- This should a choice and each Node Operator can decide which split they prefer.
This will mean an increase in the number of minipools and an increase in the number of stakers. Node Operators can absorb the demand and take on more stakers without having to risk more ETH.
I believe this will help Rocketpool grow faster and become a bigger and more solid staking provider and importantly diminish the premium on rETH and offer a solid alternative to centralised staking providers.
In addition, the APR of rETH will increase due to higher efficiency (idle ETH compared to staked ETH)