DeFi Project Spotlight: Rocket Pool, Staking Service for Ethereum 2.0

Key Takeaways

  • Rocket Pool is a staking service for Ethereum 2.0, which democratizes and streamlines staking for node operators and users.
  • Despite the project being in beta, over $200 million in ETH have been deposited.
  • The team has been working on Rocket Pool since 2016.

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Ethereum has been around since 2015. The technology was groundbreaking at the time of its launch. It enabled blockchain-based applications, such as DeFi and games.

Five years later, Ethereum’s tech looks inferior to competitors, most of which emerged during the 2017 ICO boom. 

Low throughput significantly throttles the performance of Ethereum-based dApps. The project utilizes a secure but slow Proof-of-Work (PoW) consensus, which only allows 15 transactions per second (TPS) at best.

Meanwhile, other Layer 1 platforms like Polkadot and Solana can handle hundreds or even thousands of TPS because they run more efficient consensus algorithms like Proof-of-Stake (PoS).

PoW consensus requires nodes to run specific algorithms, committing their computing power to the network’s security. PoS, on the other hand, uses financial incentives to keep nodes from behaving maliciously.

Ethereum planned to transition from PoW to PoS for years, but it has been difficult from a technological standpoint. Moreover, as the network expanded and absorbed more value, the stakes grew higher. If the transition goes wrong and users lose money, Ethereum will lose much of its reputation.

Still, the team is working on moving Ethereum to PoS. It decided to separate PoW-based Ethereum 1.x from PoS-based Ethereum 2.0. The two blockchains will exist in parallel until a full transition from one to another is possible. 

After years of development and weeks of running testnets, the date for launching Ethereum 2.0 was finally published. Along with it, the team revealed a staking contract, where node owners can deposit their funds.

PoS systems incentivize node owners to stake funds by offering them rewards. The…

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