Rocket Pool Loan Marketplace

The Rocket Pool Loan Marketplace (RPLM) proposal aims to enhance the Rocket Pool (RP) ecosystem by internally connecting borrowers and lenders with shared interests. It seeks to retain liquidity within the RP community through customized, trustless peer-to-peer loans, utilizing RP-related tokens. The proposal allows RP community members to act as matchmakers to facilitate loan deals, adding value and retaining fees within the ecosystem.

There exists potential within the Rocket Pool (RP) ecosystem to directly connect borrowers and lenders with overlapping interests, before resorting to external liquidity.

Example: RPL holders seeking to increase their exposure to RPL versus ETH (a long beta bet) could benefit from engaging with rETH holders who are looking for DeFi lending opportunities to boost their yield. Facilitating the use of RPL as collateral for RETH lending opens doors for mutually beneficial matchmaking. This example shows that when there are overlapping interests among borrowers and lenders within the RP ecosystem, connecting them directly peer-to-peer can result in a mutually beneficial win-win.

Previous Work
Existing initiatives like the Matchmakers Matchmaking Discord channel and upcoming projects like Nodeset are exploring RP internal matchmaking potential. However, we believe that further development and institutionalization in this area could benefit the RP ecosystem, reducing friction and fostering borrowing and lending collaboration within the community. The current stage of matchmaking between borrowers and lenders within RP is still in an early phase, with potential to further improve and grow.

Idea: Rocket Pool Loan Marketplace (RPLM)
To unlock the potential from overlapping borrowing and lending interests within the RP community, we propose the establishment of a specialized Rocket Pool Loan Marketplace (RPLM).

The RPLM aims to facilitate seamless connections between RP community members for peer-to-peer loans, enabling them to explore internal borrowing and lending opportunities before turning to external sources of capital. This strategy not only mobilizes the inherent liquidity within the RP community but also directs it towards RP users who need it, rather than allowing it to flow out of the RP economy. In doing so, it fosters mutually beneficial interactions among members.

Target Use Cases
RP tokens offer a variety of use cases in DeFi. For example, RPL can be used as collateral to borrow another token, or alternatively, another token can be used as collateral to borrow RPL. There are numerous possible combinations of collateral and borrowable tokens. Some of these are already supported by Aave, while others are not (as detailed below).

With the RPLM, any combination of RP collateral and RP loan token is possible. Some of the most interesting current use cases include:

  • Using RPL as Collateral: Borrowing rETH, ETH, or stablecoins against RPL. This arrangement allows RPL holders to leverage their RPL holdings or acquire funding to start new minipools, while still benefiting from RPL’s potential upside.
  • Using rETH as Collateral: Borrowing RPL against rETH. This option lets NOs acquire RPL for minipools without direct RPL exposure, while the rETH collateral continues to accrue rewards. While this is somewhat feasible with Aave, MYSO provides significant advantages for long term borrowers due to fixed APR costs and no liquidation risk.
  • Using LP Tokens as Collateral: Similar to the above, but using something like rETH-ETH Balancer LP tokens as collateral benefits the RP ecosystem by enhancing DEX liquidity in rETH. While the collateral is not as rewarding as rETH collateral, the benefits to RP could make this worth incentivizing.
Coll. = RPL Coll. = rETH Coll. = LP Token Coll. = ETH, Stables etc
Loan = RPL - :white_check_mark::eyes: :x::eyes: :white_check_mark::ring:
Loan = rETH :x::eyes: - :x: :white_check_mark:
Loan = LP Token :x::eyes: :x: - :x:
Loan = ETH, Stables etc :x::eyes: :white_check_mark: :x: -

:white_check_mark:: Possible on Aave
:x:: Not possible on Aave
:eyes:: Target use cases
:ring:: Whale marriage (referring to scenario where a user contributes ETH and borrows RPL from a whale to create minipools. In this arrangement, the user providing ETH acts as the borrower, while the RPL whale assumes the role of a lender and has potential default risk)

The RPLM would offer several benefits:

  • Fully personalizable loans: Tailoring loans to the specific needs of RP users, rather than a one-size-fits-all approach. For instance, this approach facilitates ‘partial marriages,’ where individuals who fall slightly short of the staking threshold can borrow the gap amount.
  • Handle any RP related token: Ability to seamlessly support all RP-related tokens, including RPL and LP tokens, unlike conventional lending protocols.
  • Trustless: Loans can be executed fully on-chain, eliminating counterparty risk. Trusted loans are possible too though.
  • Predictability and Planning: Since all loans would be structured as Zero-Liquidation Loans, where borrowers have no liquidation risk and APR costs are fixed, borrowers would benefit from greater predictability and easier planning.

Loan Matchmaking
RP community members can contribute to the RPLM by acting as a matchmaker and helping borrowers find lenders and vice versa. Matchmakers would facilitate negotiations, help structure viable loans, and in return earn loan origination fees from collateral in successful transactions. For example, assume there was a 1% loan origination fee: by matchmaking a loan in which $70k worth of RETH is lent to a user providing $100k worth of RPL as collateral, a matchmaker could earn $1k in RPL.

This role, open to all RP community members, could expedite loan agreements and offer attractive earning opportunities within the RP ecosystem, while retaining value within the RP ecosystem instead of paying fees to third-party lending protocols. If desired, the matchmaking process could be further formalized through the establishment of a grant for matchmakers and/or a Loan Management Committee (LMC), appointed by community vote.

In situations where no matchmaker is required and a borrower and lender directly connect, the loan origination fee could be given to the party initiating the arrangement. For example, if the lender proactively proposes a loan to a borrower who then accepts, the lender could be awarded the fee. On the other hand, if a borrower actively seeks out lenders and successfully finds a suitable match, the fee could be granted to the borrower.

Implementation and Execution
MYSO could develop a tailor-made RPLM user interface, focusing specifically on loan matchmaking with RP-related tokens, and incorporating elements of the RP visual identity. This can be done very efficiently by reusing the existing MYSO DApp (see here), customizing it akin to a white-labeled version. On the smart contract level, the RPLM could utilize the MYSO v2 smart contracts, which have already been audited by Statemind, Omniscia, and Trail of Bits, hence no smart contract development work would be needed. MYSO could also assist matchmakers with tools for loan pricing, backtesting, risk analysis, and educational materials for more efficient and informed loan structuring.

Next Step
As an initial measure, we propose conducting a temperature check to gauge the RP community’s interest for the RPLM through a forum vote.

  • Yay - Interested to see a dedicated Rocket Pool Loan Marketplace (RPLM).
  • Nay - I don’t see any value in this.
0 voters

I can see great value in this for a few reasons.

  1. MYSO V2 allows loan providers to set their own terms such as interest rate, term, up front fee, collateral requirements and borrowing currency.
  2. Loans can be constructed by a lender with a specific borrower in mind and only seen by that borrower.
  3. Would be great to see longer term stablecoin loans available with RPL as collateral.
  4. Also if RLPM loans can be made available on the Arbitrum network would reduce gas fees.