Alright wanted to share some ideas I’ve been thinking about the past few months, mainly on NO side.
Important point that renders all of the below dumb if we aren’t on the same page - spending dollars on getting new validators is a worthwhile endeavor for the protocol, for two reasons: -
-
New validators means more people buying RPL. So if we sell RPL to fund marketing / biz dev, it’s made up for (and then some) by new NOs buying (at least) the minimum amount of collateral required.
-
rETH doesn’t have a chance if we don’t go hard on the NO side. It’s a classic chicken & the egg. We can’t even get integrated into a protocol like Maker unless there’s enough supply. So we need to agree that we should be more aggressive with growth/spending to get us to the point where there’s sufficient supply to be worthwhile to get integrated across DeFi. The longer we sit with a useless coin, while stETH continues to dominate mindshare as the best collateral in DeFi, the bigger the gap becomes / the more we’ll have to play catch up. And at the very least, in terms of how this pays for spending - rETH being integrated across DeFi increases awareness of RocketPool, which will lead to more potential NOs being aware of RocketPool (a ton still aren’t), which means more NOs, which means more people buying RPL.
Tbh, from here, it would be awesome if we had some estimates on what the breakeven cost would be for signing up a single NO who runs a single validator with the minimum collateral. Just so we know that even if we spend up to that amount in RPL for these activities, that it’s paid for buy the new RPL that gets bought.
Anyways, my ideas (not saying all are great, I’m sure there are arguments against some of them, or aspects of them):
-
Double down on a strength - give incentivizes to AllNodes / other service providers like them for new RPL validators. I’ve noticed they cycle banners at the top of their homepage, currently it’s promoting RPL, but hasn’t always. Additionally, their ETH2 staking page (Ethereum 2.0 (ETH2) Staking on Allnodes) doesn’t even mention RPL. If we can make it more profitable for them, i.e. giving them 3-4 RPL tokens per new validator, there’s a good chance they could modestly increase the validators launched through them, either from internal site marketing, or externally through ads, etc.
-
Do a deal with an ETH whale to borrow their ETH to launch new validators with in return for a better than market rate interest rate on their ETH. i.e. imagine 100k ETH for like 15% interest, due back in 24 months. Launch validators with them. Instantly solve the chicken and the egg problem in one action. (I completely made up numbers, obviously a lot of discussion to figure out the sweet spot that would work for a whale, and would work for us).
-
Ethereum dot org staking webpage feature - is it a stretch? Potentially. But, if someone who works on the website is bought into the RPL vision and realizes how much our values align with broader ETH community, on this page (Ethereum staking | ethereum.org), having a new button under “How much are you willing to stake?” that says 16ETH could be an incredible piece of promotion. Can still have a warning about smart contract risk, language doesn’t need to be super promotional for it to be incredibly powerful.
-
Get found on every search result for terms like “run an eth validator”. We’re on some of the results, but not all. Getting in front of people researching how to become a node operator is a no brainer from an ROI perspective. Reach out to the authors of those articles. If they don’t do it purely because it’s a good value add, offer to pay, easily worth it even at hundreds of dollars / a grand or two. If we have trouble, then reverse approach - find authoritative crypto sites that haven’t written about running an eth validator, pay them to write one and include RocketPool, and because they’re authoritative it’ll outrank existing sites showing up for those terms.
-
Piggyback the shit off of Lido’s coverage anywhere online. Anywhere Lido is mentioned in a write up, and/or stETH, high chance that RPL/rETH should be mentioned. Will take some man hours, but the ROI on those man hours is a no brainer. Plenty of mention monitoring tools to help with this, other than doing a bunch of advanced search operators in Google.
I didn’t even touch on institutional staking partnerships, only because Darren mentioned they’re in the works, but that would also be another game changer.
If anything, my desired outcome with my comments above is to convince us that there’s real value to be gained by marketing / biz dev, that there are plenty of things that can add serious value, and that we NEED more dedicated core team members to do these things.
6 Likes
I agree with much that is said above. More funds spent to attract new NOs is needed.
I would be in favor of a marketing campaign compensating new NO’s for the txn fees covering their:
- registering a node with RP
- staking RPL
- starting a minipool
Run it for 3-4 weeks. If you want cap the total funds to be spent to 5ETH. It can be gamed but not easily and even so you still have new NOs I think it would be good press. Other limits can focus around targets - only include when commission is 10-15%, or when gas is over 100 gwei (or under 100 gwei).
1 Like
Agreed - although I think a lot more than 5ETH could be worth doing, would only be budget for like 25 or so.
I want to echo this sentiment. I think we’re doing a pretty good job with consistent growth, but withdrawals being allowed post-merge is only a matter of time. Lots of staked ETH locked up with CEXs will want to chase better products, the bigger the mindshare RPL has the better.
2 Likes
I meant to do the math and see how much the txn fees are for the three txns I mentioned above, avg gas of 65. I will get back to you in a bit but a target of 100 NOs would be good.
So i think a decent estimate of all txn fees a new NO would incur with recent gas prices is .16 eth (.035 + .0125) per new NO with 1 minipool. See screen grab
As you can see in the screen grab, this covers more than the 3 txns I mentioned above. So with a 16ETH budget we could feasibly reimburse the set up costs for 100 NOs
2 Likes
Love this, great work on spec’ing everything out!
One follow up thing I want to add - in regards to my comment here:
it would be awesome if we had some estimates on what the breakeven cost would be for signing up a single NO who runs a single validator with the minimum collateral. Just so we know that even if we spend up to that amount in RPL for these activities, that it’s paid for buy the new RPL that gets bought.
I actually think the math is pretty simple - for each new Node Operator we entice, who only buys the minimum amount of RPL to run a single validator (essentially the most conservative assumptions possible), that’s 1.6 ETH of RPL being bought on an exchange.
So i.e. spending 0.16 ETH to acquire a new NO, who buys 1.6 ETH of RPL, means a 10x return on our spend. Do the math on if we rinse & repeated that over and over again - RPL price skyrockets, protocol TVL skyrockets, rETH supply skyrockets.
Yes, each NO isn’t locked in for life. And I assume that i.e. 3 years out, at least 20-30% of NOs will have exited. Maybe it’s more like half. Impossible to tell. But even at 50%, the ROI on spending 0.16 ETH to acquire them is still high. And that’s with the most conservative assumptions possible. And that doesn’t even mention the positive byproduct of protocol growth that will bring more awareness and new NOs as a result.
The more I dissect it from different angles, the more & more the math feels nuts on how much value we would add to the protocol with even modest amounts of spend.
Also shows good will.
gathering data on the impact tho might be hard. That is to say, how do we know the NO came to RP bc of the txn fee payback/incentive vs they were going to come irregardless of the marketing. I dont really care either way. We could see how many new NOs we get in a week, lets say “n” and measure against that as a base level, so n+1 could be argued as the measured impact.
1 Like
Hey @coop.eth - thank you for the post!
Thank you for your suggestions, I agree on:
- We should approach Ethereum dot org about featuring more about Rocket Pool
- We already have good recognition for eth2 and have had several articles written about us but yes we will continue to look for opportunities to get coverage from news, bloggers, and youtubers and the like. In the short-term, The Merge is going to get lots of eye balls so we will be focusing our content efforts on that and “why you should run an Ethereum node?”.
- Agreed about Lido - we are now being seen as a significant player in the space, as our TVL grows so we are getting more and more opportunities for that.
I think we are already doing a lot in the marketing / biz dev space, here is some examples:
From a marketing perspective, we are:
- developing relationships with journalists to ensure our milestones are heard and that we become the go-to quote for ETH staking
- developing a node operator landing page (hoping to share soon) to help in converting potential node operators
- upping our Twitter engagement
- working on several node operator related articles with media outlets to drive interest and steer them to the landing page
- we may use paid adverts but, to be honest, we haven’t found any that target the audience we need just yet - apart from beaconcha.in and Etherscan.
- approaching mining related YouTube channels
- we are putting together a content pipeline around The Merge to ensure we capture buzz and traffic around its launch
- we will invest in education material for new node operators - instructional videos etc. i believe there is now a proposal on this forum
- we are now able to attend events and get the message out there, run workshops, present, and man a booth
From a partnership perspective:
- working on allowing infrastructure and staking-as-a-service providers to use Rocket Pool in a trust minimising way - ideally leading to an ecosystem of staking-as-a-service providers built on Rocket Pool
More specifically about spending dollars on getting new validators - I agree but we also need to make sure it is effective. We have considered a referral program but it is extremely easy to game and it has short-term effects, rather than long-term. You mentioned Allnodes - to be honest we would rather go wide rather than deep. Our aim to to keep things as decentralised as possible, which is why we are interested in promoting an ecosystem of staking-as-a-service providers. This gives us a long-term strategic platform.
3 Likes
70% of RPL inflation is already given to node operators. Depending on how much a node operator collateralises their node, the RPL reward amply covers the setup costs.
1 Like
Thanks Darren for your reply!
The two biggest things that popped up in my mind while reading through your response:
-
At what point are you personally being stretched too thin? If there are worthwhile marketing endeavors that we could be doing that you don’t have the bandwidth for, and/or there are endeavors you can’t dedicate as much time as necessary to extract the full value from, when does it make sense to hire an additional core team member? I just feel like the amount of responsibilities falling on your shoulders is becoming overwhelming, given both the biz dev side things as well as marketing.
-
you mentioned you’re on board to spend dollars on getting new validators - can we have an open discussion / separate thread to discuss as a community what we believe is a worthwhile amount of dollars/eth to spend to on-board 1 new validator? If we don’t know what this amount is, then it’s going to be difficult to figure out what kinds of activities count as being worthwhile, and which ones aren’t, from an ROI perspective.
1 Like
I’m not sure I communicated my point clearly.
Yes 70% of RPL inflation is already given to NOs. This is understood.
The marketing incentive, covers the cost of starting/registering a new NO and 1 minipool. This is something different than RPL rewards. Its a onetime marketing expense, to bait the hook in getting NOs to sign up. Maybe it wouldn’t make a difference - whats another .16 eth in txn fees when locking up 17.6 eth? But maybe it gets new people to just give it a try with just one minipool.
I dunno just throwing ideas out here.
1 Like
For small NOs with a single validator with <50% collaterlization, cost to claim rewards each month heavily cuts into reward amounts. Personally, I did make the money back in RPL rewards, but I maxed out collateral for 4 validators, so the gas didn’t bother me much. But I’m not most.
We are acutely aware of that issue, which is why we have dedicated a good amount of time reworking the reward system. Obviously gas prices come into play but from our initial numbers, the reworked reward system will enable new node operators to be cost-neutral in their first year using 10% collateral.
This is discounting the psychological impact that up-front costs come with. If we dialed it back to i.e. 65% inflation, and used 5% to offset costs for new NOs, would be same net inflation, but way more enticing to get new NOs to join.
Totally accept the psychological impact of up-front costs - although people are quite used to paying gas fees now. In a permissionless protocol, defining a “new operator” is extremely tricky without some sort of sybil resistance or applying KYC - so it would be open to gaming and it would distort our node operators numbers substantially.
To me, it doesn’t really make sense to increase complexity when RPL rewards already do the job, albeit over a longer period of time.
At what point are you personally being stretched too thin? If there are worthwhile marketing endeavors that we could be doing that you don’t have the bandwidth for, and/or there are endeavors you can’t dedicate as much time as necessary to extract the full value from, when does it make sense to hire an additional core team member? I just feel like the amount of responsibilities falling on your shoulders is becoming overwhelming, given both the biz dev side things as well as marketing.
I am quite mindful of that point, as you can imagine. We will hire a growth/community person - it is likely to be someone from the community and part-time initially.
There are a couple of reasons for that; it would be extremely helpful if they were crypto-native, already have some familiarity with DeFi. We can train knowledge of Rocket Pool but without some crypto background they would find it tough going.
Also we wouldn’t hire full-time (at least initially) because unlike other companies our revenue does not linearly scale based on our TVL and we have to liquidate RPL to fund operations, which is why we are mindful of our cost base.
At this relatively early stage, I am figuring out what I can delegate and what I can’t. There is a lot of activity that I simply can’t delegate - writing forum posts like this for instance 
Once I have a good feel for what I can delegate, we can put a position description together. I am not quite there yet but it won’t be long.
you mentioned you’re on board to spend dollars on getting new validators - can we have an open discussion / separate thread to discuss as a community what we believe is a worthwhile amount of dollars/eth to spend to on-board 1 new validator? If we don’t know what this amount is, then it’s going to be difficult to figure out what kinds of activities count as being worthwhile, and which ones aren’t, from an ROI perspective.
Calculating the acquisition cost/ROI for a node operator is a fair call. I am not sure it is as straight forward as a traditional business where ROI = increase in business - acquisition costs. The relationship with a token model is more indirect. Happy to hear all ideas around activities that are worthwhile from an ROI perspective - although they obviously have to be practical. Direct incentives are very hard to make practical in a permissionless way.
We are happy to spend money on sponsoring events and hackathons to drive awareness. Let me know if there are any other channels where you think we will reach potential node operators.
4 Likes
As a new small NO myself I would say that finding the right hardware to run the stack in a cost-effective way is one of the most challenging parts. I think RP should buy Raspberry Pis in bulk and make them available for new NO. Trying to buy them from the market has been quite a challenge (I’m looking for one myself for months) and as shown here Production and supply-chain update - Raspberry Pi they seem to be production restrained and focusing on big industrial or commercial clients. The distribution could be done on conference booths (“become an operator today and get your raspberry pi ready to produce blocks!”) and other means.
