Proposal to Stake 1000 ETH from ENS DAO Treasury into Rocket Pool

💬 General Discussion
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Contact Details

Name: signalxu
Discord: signalxu
Title: Star Program Owner for Rocket Pool DAO

Protocol Information

Rocket Pool, launched in November 2021, is a pioneering liquid staking solution that democratizes access to ETH staking rewards. With $2.53 billion in TVL, it’s a leading player in the liquid staking space. Founded by David Rugendyke, the protocol is now governed by two DAOs: the Oracle DAO and the Protocol DAO.

Rocket Pool’s liquid staking token, rETH, offers users a seamless way to participate in ETH staking and unlock its rewards. rETH Node Operators are collateralized with 25% staked ETH, shielding rETH users from slashing risks. This robust security mechanism ensures that users can participate in ETH staking with confidence.

Background

The Ethereum Foundation has begun staking its treasury ETH and engaging in the DeFi ecosystem to generate yield and ensure sustainable growth. As a key part of the Ethereum ecosystem, ENS DAO can follow suit by staking treasury ETH to earn rewards while maintaining liquidity and supporting Ethereum’s decentralized infrastructure.

Proposal Detail

This proposal suggests that the ENS DAO Treasury stake 1000 ETH into Rocket Pool to earn staking rewards while maintaining liquidity through rETH. By doing so, ENS DAO will diversify its treasury holdings, generate sustainable yield, and support Ethereum’s decentralized staking ecosystem.

Incentive Opportunity

rETH is currently trading at a 0.786% discount in the secondary market. If ENS DAO purchases 1000 ETH worth of rETH from the market, it can gain an additional 4 ETH. Given the current rETH APR of approximately 2.78%, this presents an attractive opportunity for enhanced returns.

Rocket Pool also supports node operation. With the latest upgrade removing the requirement to stake RPL, node operators can now participate using only ETH. Node operators earn an approximate APR of 5%, making this an alternative or complementary strategy for ENS DAO to maximize staking rewards.

rETH is also integrated with DeFi platforms such as AAVE and Balancer, allowing holders to generate additional yield by using rETH in lending or liquidity provisioning. The Rocket Pool Incentives Management Committee (IMC) utilizes its liquidity budget to incentivize related protocols, providing further earning opportunities for rETH holders.

Risks / Monitoring

As a liquid staking token, rETH’s value accrues over time as staking rewards are earned, causing its price to appreciate relative to ETH. This means that rETH’s price will naturally drift away from a 1:1 ratio with ETH, reflecting the accumulated value of staking rewards.

Resource

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@0xsignal - We love seeing advocates for diversified staked ETH products! Thanks for stopping by and taking the time to make this post.

ENS DAO passionately agrees with and supports your mission. :point_right: We currently hold over 2,500 rETH. :point_left: :grin:

(receipt: etherscan link here)

We also codified a formal policy last year that ensures we hold a diversified mix of staked ETH products, with a provision that prevents the DAO from holding products from organizations that hold over 20% of consensus.

Here’s the relevant bit:

Ecosystem Objective: Endowment’s investments should be consistent with ENS’ ethos as a public goods project. This includes, but is not limited to, prioritising health of the Ethereum ecosystem, and deployment of capital in venues that are consistent with ENS’ ethos. All else held constant, opportunities that benefit the ecosystem should prioritised. As an example, Ethereum liquid staking derivative (LSD) protocol exceeding critical consensus threshold of 1/3 can pose security risk to overall health of the Ethereum ecosystem.

  • Based on the above priorities of ENS, Endowment shall not allocate to an LSD protocol, or to its benefit, with >20% of consensus.
  • Endowment shall favour LSD protocols with emphasis on decentralisation, such as operating via permissionless node operators.
  • Endowment shall not allocate ETH to centralised exchanges, and will limit exposure to permissioned providers to 10% of Endowment size.

Here’s a link to the most recent endowment report.

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Thanks for the update! The 20% cap from ENS is a great and commendable approach. If you run into any issues regarding rETH, feel free to share your feedback!

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