This post proposes the first steps towards Rocket Pool’s path to ‘minimal viable decentralization’, starting with governance weight, key parameters, and the Trusted Node DAO.
These topics are an extension to RPIP003, further detailing how the system may be upgraded and changed in the future through RPL governance.
Governance weight in Rocket Pool is earned by:
- Node operators staking RPL against their validators.
- Reserve Pool liquidity providers staking their LP tokens.
Governance takes the form of a ‘Rocket Pool DAO’ defined by a contract that has ownership over (at genesis) a set number of key parameters (defined below).
Genesis governance will give different stakeholders voting power relative to their contribution to the network. This means:
- Governance weight is directly correlated to the amount of RPL staked in the system.
- Node operator weight is assigned relative to the amount of RPL staked across validators, including a max collateralization ratio of 150% worth of RPL for each 16 ETH deposit.
- Reserve Pool weight will be assigned relative to the amount of LP tokens staked in the protocol, with the Reserve Pool weight capped at 90% of the total RPL staked by node operators.
- The total governance weight of the Reserve Pool cannot outweigh the governance weight of node operators. See Reserve Pool post.
This design ensures that validators hold the majority of governance weight at any given time, so Rocket Pool governance cannot be captured by non-validators passively staking RPL.
Node operators and RPL stakers will have the ability to vote on Rocket Pool protocol changes. These parameters will continue to be updated and expanded in the future based on the community’s sentiment.
At genesis, the primary governable parameters will include the allocation of RPL inflation, ownership of Rocket Pool DAO treasury and community/development incentives. This means governance will be able to adjust:
- Validator Commission Fee Parameters - The minimum and maximum parameters for validator commission fees to ensure Rocket Pool can react to economic factors in real time.
- RPL Staking Rewards - The parameters for Node Operator and passive RPL stakers voting weight and reward distribution.
- Community/Development Incentives - The allocation of inflation to support the growth and development of the protocol in order to stay competitive within the market landscape.
- Liquidity Incentives - Rewards for RPL and rETH liquidity to help node operators acquire collateral and allow rETH to play a viable role in DeFi and the broader Ethereum ecosystem.
Over a longer time frame, Rocket Pool governance may elect to govern:
- RPL Inflation - RPIP003 proposes to implement a fixed 5% inflation rate for the first year, starting at mainnet launch. Rocket Pool Governance will be able to elect a long-term programmatic issuance schedule upon analyzing the data and feedback from the initial period.
- Protocol Fees - While not activated at launch, the Rocket Pool community may elect to introduce protocol fees from staking. The community can adjust the fee rate with the hope of having it stabilize over the long term.
- Protocol Upgrades - In the future, all Rocket Pool protocol upgrades will be owned and executed through governance.
Trusted Node DAO
This DAO governs the group of ‘Trusted nodes’ that act as an oracle from the ETH2 beacon chain.
The Trusted Node DAO is a permissioned group of known actors governing:
- Admission - Vetting new trusted node operators who have passed identify verification and been championed by an existing Trusted Node operator.
- Requirements - Determining RPL stake (10,000 RPL), maximum validators and technical requirements.
- DAO Parameters - Solidifying and adjusting quorum (66%) and majority (75%) of the Trusted Node DAO as the number of members expands.
- Disputes - Establishing standards for slashing in the event of malicious behaviour and grounds for trusted nodes removal.
All together, this blueprint for governance marks the first step in decentralizing ownership of the Rocket Pool protocol to the community of RPL holders. The topics presented in this post should be finalized in line with community feedback, and implemented as a part of RPIP003.
As a group heavily involved in governance across many DeFi protocols, we have taken the best practices to offer a minimum viable path to decentralization, rather than proposing a full fledged DAO out of the gate.
We look forward to hearing feedback from the community and setting a precedent for community-owned staking using Rocket Pool as the standard.