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# System prepended metadata

title: Rocket Pool x Nouns

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# Rocket Pool x Nouns

## TLDR

Rocket Pool is currently the most decentralized staking solution available for Ethereum. Staking a portion of the Nouns treasury with Rocket Pool instead of Lido reduces risk to the Nouns treasury and promotes network decentralization.


## Description

### Rocket Pool
Rocket Pool is a trustless, permissionless, and battle-tested staking service. With over 2000 node operators running over 17000 validators, it sets the gold standard for liquid staking.

Over 500,000 ETH is currently staked with Rocket Pool, making it the third-largest TVL after Lido and Coinbase among liquid staking providers.


![](https://i.imgur.com/61PNDST.png)
###### Source [ethereum.org](https://ethereum.org/en/staking/pools/)

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### rETH
rETH is Rocket Pool's liquid staked ETH token (LSD) and offers compelling advantages over many alternatives.

#### Insurance
rETH has best-in-class resistance to black swan events, such as a massive slashing resulting from client bugs. 

If a slashing event were to occur, funds are first deducted from the following sources before impacting rETH holders:
1. Node operators' ETH Share(~185k ETH)
2. Node operators' RPL Bonds(~200k ETH)

In contrast, Lido's insurance fund only has around 6k stETH total, which (A) is stETH-denominated itself and (B) services 25 times more TVL.

#### Peg Performance

rETH has shown more resistance to negative de-peg than stETH.

![](https://i.imgur.com/YBdrhmr.png)
###### Source [Dune Analytics](https://dune.com/drworm/rocketpool)
Both stETH and rETH are expected to be better able to maintain their respective pegs via significantly different methods. Lido will request their NOs to exit as needed to restore supply/demand balance. Rocket Pool will primarily balance using deep liquidity and market arbitrage opportunities for rETH holders. If needed, arbitrage opportunities for NOs that create/exit validators serve as guardrails for the peg.

#### Value-accruing Token
rETH is a value-accruing token, meaning its price vs. ETH increases over time. In most jurisdictions, this limits taxes to when it is sold, as opposed to being considered ongoing income.

#### Tail Risks
Every liquid staking protocol has some level of risk.

Rocket Pool's decentralized and on-chain nature means that protocol-related bugs are the primary concern. Comprehensive and continuous audits, bug bounties, and an engaged community of node operators are the primary methods of mitigation.

Lido's group of trusted node operators with no personal bond currently means that a node operator could keep all execution layer rewards for themselves and refuse to exit validators. This risk is mitigated through legal contracts and by specifically choosing operators that are trusted members of the Ethereum community.

While one can argue which tail risks are larger, a key practice in risk management is diversification.

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## Proposal
* Stake 5000 ETH from the Nouns treasury with Rocket Pool for rETH.
* Consider converting a portion of the existing treasury stETH to rETH when Lido enables withdrawals. 

## Credits & Thanks
**valdorff.eth** - Support with writing and editing this proposal.
**drworm** - Creating the Rocket Pool Dune Analytics dashboard.