Hi, I’ve just staked my eth to rocketpool without realizing until after there is a bit of a price difference between rETH and Eth, so I received less rETH. Excuse my ignorance, but does this mean if the two prices are at parity in a year and I then unstake, would I actually have less ETH a year from now than if I hadn’t staked?
Thank you,
Denis
Hi Denis.
No, it doesn’t mean that, thankfully!
rETH is not a rebasing token, rather it rises in value relative to ETH. It started life equal to one ETH, but as Rocket Pool validators earn rewards, those go to increasing rETH value.
What will matter for you is the difference in rETH price when you sell. You might buy when rETH is 1.07 ETH and sell at 1.10 ETH which would mean a profit of 0.03 ETH per rETH minted.
rETH will always climb relative to ETH since it accumulates rewards (with technical exceptions over short terms for off-peg behavior).
Does that clear it up?
Edit: It occurs to me that I should invert the buy ratio for maximum clarity since that better matches your question above:
Buy
current exchange rate: 1 ETH = 0.934 rETH / 1 rETH = 1.07 ETH
Mint 1 ETH worth of rETH today, you will receive about 0.934 rETH
Over time, ETH/rETH will always increase (so rETH/ETH will always decrease), thus, in the future you could sell your 0.934 rETH when, for example, 1 ETH = 0.91 rETH.
Sell
some future exchange rate: 1 ETH = 0.91 ETH / 1 rETH = 1.1 ETH
Burn 0.934 rETH to receive about 1.03 ETH => (0.934 rETH * 1.1 ETH/rETH = 1.03 ETH)
So a 0.03 ETH profit from your original 1 ETH mint.
Thank you, Dr, I think so. If I’m understanding correctly, you’re saying if I sell in a year or in two, the price will go up the precent equal to my rewards? So if I sell a year from today and the APR is 5.46% at the moment, that’s how much the rETH would go up, is that correct? Thank you, Denis
I would have to caution that APR is what the rise was in the past, not necessarily predictive of the future. However, yes, basically, your rETH will grow in value likely around that rate and this will be reflected by a decreasing rETH/ETH ratio (increasing ETH/rETH ratio). So when you sell, other people will be minting rETH at things like 1 ETH = 0.9 rETH etc. depending on how long you wait.
Ok, got it, thank you for explaining it all.