The State of Staking in 2026

Transcript

All right. Well, good afternoon everyone. For those that don't know me here, my name is Ken Smith. I'm uh uh give you a little bit of my background. The most important thing there is I'm a home staker with Rocket Pool. And I'll talk a little bit about that protocol and kind of where it is and maybe a little bit of lessons learned that it had over its recent upgrade and then I'll talk just a little bit about maybe some of the design thoughts of where it's going in the in the near future here. So, as I mentioned, I'll just give you cuz there might be some folks unfamiliar with Rocket Pool. I'll give you just a a brief um quick introduction to it.

I want to spend a little bit of time updating you on its recent upgrade that it had. It's called Saturn 1. Um as the agenda might show here a little bit, there was a bug in that release, I guess. And it's kind of an interesting lessons learned story. Um it's never a good presentation if we don't do a side quest on the way there. And then I'll talk a little bit about what comes next for Rocket Pool. So, many of you are probably familiar with it. Rocket Pool is a fully permissionless decentralized liquid staking protocol.

Um it has no white list, no KYC. There is no curated operator set. It's managed almost entirely via smart contract implementation on the blockchain. Uh like any LST, there are two ways to participate in it. Um one way is you just hold ETH. You want to earn yield. You're a liquid staker. You simply deposit, you get your liquid staking token out of it, and you go do whatever you want to do in Ethereum in the in the the infinite garden that it is. Another way is to be a node operator, actually be a home staker like like many of us here. And in Rocket Pool's history, it's always kind of varied between which one it it needs more of or it's leaning. And for a long time we needed more node

operators. So we were here at various different conferences trying to educate people on how to run a node and how to join. But now the pendulum has swung completely over the other way and we actually need more depositors into the liquid staking pool to kind of fund a very large queue of node operators that are kind of waiting to be matched with additional ETH to form that minimum 32 ETH requirement. And then just in a short summary here, there's the liquid staking token, rETH, right? There's a governance token, what used to be a governance token, but actually now is a governance and yield token, one of the improvements in Saturn one,

called RPL. And the way I like to think of it is rETH is the product that Rocket Pool produces and RPL is kind of a governance and a yield boosting token now. Okay, so where where are we? We're at this little yellow line right here. Rocket Pool was launched in '21. It had its last upgrade about a year or more ago. And then just recently had Saturn one and that came out last month. So the timing of this conference is is very good in terms of doing a little bit of retrospective on Saturn one. And then I want to highlight if I have time a little bit just about Saturn two coming up because in the community right now there's a lot of debate and discussion about what should be included in Saturn

two here. Okay, so Saturn Saturn one just briefly. Saturn one had a number of upgrades that I've listed on this slide here, but I want to call out just four of those as kind of the maybe the the key enhancements from there. And I think Saturn one was really one that was trying to move the pendulum between how do we make it more efficient for the existing node operators that we have? And Rocket Pool has probably one of the biggest sets of independent node operators. I think there's about 3,400, 3,500 independent node operators. So, it is probably one of the biggest aggregations of home stakers that are out there.

Um but they don't have much money, right? They don't have much collateral. So, we wanted to find a way to very efficiently stake uh as much of the liquid staking token as possible. And so, it did a couple of things. Um one of the things it did in in um in uh in Saturn one one is it reduced the bond by those home stakers. Uh historically, uh Rocketpool started out with a matching bond of 16 ETH. Um it was reduced as kind of the risk um was better uh classified and categorized down to eight ETH.

And then finally, it made another step now for Rocketpool in Saturn one, which now reduces the amount of bond to four ETH per validator set. And Rocketpool right now only is using the 32 ETH uh uh uh validators, right? It hasn't adopted uh like the in the previous presentation the 0x02 um uh larger uh validators. And I think it might be very interested in um what Lido had talked about in perhaps supporting um uh that EIP there to kind of increase that. But right now it supports uh a node operator bond of four ETH.

Um and one of the things that it uh did in megapoools is instead of creating a smart contract to manage each individual validator, it now uh creates just one uh contract that they call a megapoool. Previously, they were called minipools. To manage uh multiple validators. So, with one smart contract, you could have one, two, three, four that 32 ETH validators, each one of those requiring four ETH. And you can see since it launched there were about 267 out of that, you know, 3,400 node operators that did um convert and create mega pools and that produced about 5,000 32 ETH validators since the the launch

last month. Now, one of the things I said is that the pendulum is starting to shift and one thing we saw is that liquid staking protocols need to become more um uh more attractive to liquid staking token holders. And if you look at liquid staking protocols, some of them will charge a node operator commission of up to 25%, some might charge 10%. Um and Rocket Pool said that it needs to create maybe kind of this adjustable revenue split, right? We it it before it was kind of fixed and so you couldn't go back and change it. And it we can see a a vision forward that we need to adjust to market conditions, right? Perhaps we need to be

a little bit more aggressive in reducing the node operator commission to attract more liquid stakers. And so it launched with the ability now to adjust these settings and this is the current settings that's right there. It only has a 5% base commission and then currently it has a 9% extra yield. So it's a total of 14% commission if you're a liquid staker and this could change. There's a lot of debate about actually changing that here in Saturn 2 or adjusting that even ahead of Saturn 2. That's in there but now Rocket Pool has the ability to change these with a governance vote in the protocol.

Um the other implementation that it did in terms of improving the attractiveness to liquid staking holders is if you get a token, right? If you get a liquid staking token, part of the attractiveness of that token is to be able to redeem it at NAV price at at the full price that it would be equivalent to to the amount of ETH earnings on the beacon chain or the the MEV rewards, right? Um and what historically has happened is that it would trade in liquidity markets, and sometimes it would be at a premium. A lot of rocket pools live for you are paying more in the liquidity markets. Um, in other cases, it would sell at a discount. So, you, you know, you acquired a liquid staking token, you

were, um, kind of earning rewards, but when you came to cash out and sell, you didn't get the full value of those rewards, right? And so, one of the designs that, um, Saturn 1 implemented is something called the withdraw buffer. And it's only, uh, existed here since, um, you know, the past month, but you can kind of kind of look at it here, and it's designed to be about 1% withdraw buffer. And, uh, for a good part of it, it actually kind of held pretty close to that 1% mark. That would be about 4,000 ETH. Um, but then you can see it dropped out, and recently, since at least cons here, uh, it's been near depleted, right? Which means that they have to go now back to the liquidity markets, and it trades on a slight discount, right?

But ideally, you want to keep your liquid staking token kind of on on peg with that nav there, okay? Okay. Um, and then, um, the, um, uh, the last thing Saturn 1 kind of introduced here is, um, uh, kind of a fee switch, right? Which is, um, to allow, uh, the token, uh, that, uh, was there, the RPL token, to actually earn additional ETH rewards, okay? And it's called the called the fee switch in here, and that was that 8% in there.

Okay, so let me let me just go here real quick to, um, it launched. And shortly after launch, uh, there was a bug found. I think even the same day, right? Three different audits, uh, even some additional audits that, uh, that were done by community members looked at it. Um, uh, and so, the bug was kind of an interesting one. It was multi-faceted here. Um, one, there was a change in the Electra, uh, upgrade that changed the way in which withdraw credentials were issued by the beacon chain by the deposit contract. You had a wait longer before you got those. Prior to it, a deposit of at least one ETH secured a withdrawal credential.

Uh the other thing is that uh the entry queue got very long, right? It went up to about 6 weeks in entry, right? It's the longest the entry beacon chain entry queue has ever been. Um and then Rocket Pool is trying to remove the need to have its Oracle down. And so it tries to make things as permissionless as possible. And so now it allowed a a setting that if no one staked their ETH that they were issued in their their validator, you could uh dissolve them and recover that ETH, right? like the validator the node operator failed to perform their duties.

And there was maybe a fourth one I didn't mention on here that said that said, "Hey, um the one of the audit teams recommended that we put in some guardrails." I mean, guardrails are usually pretty good in a protocol setting. And one of those guardrails was the amount of time that it would take to make that deposit to get your credential. And it was set too short. It was set at 28 days. And I made mention that the just to even get in the queue and get to the front of the queue to get your withdrawal credential was 6 weeks. And so real quickly we realized that, "Hey, we needed to do a hotfix to extend this period of time." And fortunately Rocket Pool moved very fast. They were able to propose a fix, uh populate it, go through its

governance process, um uh there are delays in how quickly a patch can be put in, kind of um uh you know, settings, controls, and so forth. But likely they had caught it fast enough that they were able to implement this before that 28-day period. And so all ended up um doing very well. I'll mention just in the like I think 3 minutes that I have left in here just a couple of side quest. And then I'll I'll mention what's coming up. So there were two side quests that were kind of interesting in the last um couple of um weeks here uh that Rocket Pool did that I think is worth mentioning. Uh the first one here is it did adopt, and I actually didn't know this, the people at this conference were telling me, it did finally adopt an integrated um um mev

commit uh yeah, or I guess it's commit boost, excuse me, into um its protocol as a sidecar. So, now our node operators can run commit boost in there, and we can participate in the pre-confirmation market. And that's something I've been advocating for quite a while, so it's great to see there. The other thing that was announced right around the ETH Denver about a month ago is that Rocket Pool now has a toolkit. One of the things I personally believe is that most of the transactions on Ethereum will not be initiated by humans with wallets. It's going to be initiated with AIs with wallets.

And so, it now has a um a um a toolkit, uh and these QR codes are active, you can download it, and you can give it to your open claw or um um uh claw code or what whatever you would like to interact with our ETH. And I think we're going to see most protocols in it instead of just issuing a front end, they're going to issue a front end and a toolkit at the same time. And then last, but not least, I'll just I'll just leave with um uh two things. One, Saturn 2 is coming up, and there's um a number of interesting topics, I think, for those in the Rocket Pool community to look at. And I'm just going to leave them here because I know I'm at at time here. Um but I would say uh spend some

time to look at it because these are ones that are going to be designed to improve the rETH yield and attractiveness. And it's part of the way it's going to do that is it's going to look at mechanisms to remove underperforming node operators. And so, if you're a node operator, you really should take a look at these, comment on them and make certain that these proposals to kind of force exit underperforming node operators or reduce the node commission is you know what you're in agreement with.

And the and in in line with this, I think one of the great sites and I definitely want to give it out here in the last 60 seconds I have here is just this QR code up here for a another community member uh a steely that produced I think that one of the most beautiful dashboards I've seen yet come out of the rocket pool community, which is rocket dash. And in there you can see just kind of wonderful graphics and there's a there's a couple here I I shot here that if you're an rETH holder you can see what the nav price is in orange and how well the protocol is keeping the nav price or coming off the nav price. If you're a and if you're a node operator you can actually look up your node and you can see how well you're performing in there.

And you can see that there is this you know maybe it's a Prado curve this 10% or 5% down there that are the underperforming nodes that in Saturn 2 rocket pool wants to be able to just cut off that tail to improve the LSD experience, right? And so you can go to that website you can see a lot of that graphics and really begin to understand in that community discussion that's there. Uh with that I know I'm at time here so I just put up the slides here and my contact information and I'll be glad to answer any questions afterwards.

Thank you. Do you have any questions? I don't have a question. Okay. Well, no questions. Thank you.