Analyst Note: Revisiting Rocket Pool

Key Insights

• Rocket Pool has struggled to gain significant market share due to supply-side bottlenecks. The upcoming Redstone upgrade, along with plans to launch Low Ether Bonded Minipools, will directly address these shortcomings.
• The Redstone upgrade will enhance user experience issues for Smart Node Operators.
• The introduction of Low Ether Bonded Minipools should further reduce the economic barrier to entry on the Beacon Chain and drive more demand for the RPL token.

Rocket Pool and its grassroots community prioritize decentralization above all else. While this aligns with the ethos of Ethereum, it has limited the protocol’s ability to scale relative to its competitors. Lido controls 31.2% of all staked ETH on the Beacon Chain, followed by Coinbase (14.7%), Kraken (8.5%), Binance (6.6%), Staked.us (3.0%), Bitcoin Suisse (2.2%), and stakefish (2.1%). After nine months on Ethereum mainnet, Rocket Pool clocks in at eighth place with a 1.6% share.

With The Merge (hopefully) taking place next month, Ethereum’s staking providers are returning to the spotlight. This is great timing for Rocket Pool, since its first post-launch upgrade will occur just before the merge. Additionally, protocol governance has detailed plans to further decrease the minimum amount of ETH required to operate a Smart Node on the network. While Rocket Pool will still be playing catch-up here, the protocol is quietly positioning itself as a dark horse in the race for Ethereum staking supremacy.