Coin Vs. Coin: LDO/RPL
Lido DAO (#1 LDO) and Rocket Pool (#2 RPL) lead the Liquid Staking sector in the cryptocurrency market. Staking can often have an entry barrier, requiring great amounts of crypto to buy into the staking pool. Comparative projects like LDO/RPL are lowering that barrier by creating secondary pools where holders can collectively buy into traditional staking pools.
Lido DAO
Lido DAO is a decentralized autonomous organization (DAO) that provides a staking solution for Ethereum 2.0. The largest staking pool in the Ethereum network, Lido DAO allows users to stake their ETH tokens on the network even if they do not have the 32 ETH required for direct staking. In return, users receive stETH tokens representing their staked ETH which are tradeable on various decentralized exchanges (DEXs).
The LDO token is the governance token of the Lido DAO ecosystem, where holders have the right to participate in the decision-making processes of the DAO. LDO can also be staked in the DAO to earn rewards. LDO holders can propose and vote on changes to the protocol, fee structures, and other governance matters.
Operating on a network of nodes, Lido DAO ensures the security and performance of the staked ETH. This diversifies the risk compared to relying on a single validator. The LDO token provides holders with a user-friendly and accessible staking solution with the flexibility to trade on the network.
Rocket Pool
Rocket Pool aims to provide a staking infrastructure for the Ethereum 2.0 network. Like Lido DAO, Rocket Pool offers a solution for users who want to stake their ETH tokens but do not have the required 32 ETH for direct staking.
Rocket Pool operates as a DAO and utilizes a network of node operators to provide staking services. Users can deposit any amount of ETH in the Rocket Pool smart contract, and their tokens are then distributed among the node operators. This enables smaller ETH holders to pool resources and participate in the Ethereum 2.0 staking.
One of the unique features of Rocket Pool is its “minipool” concept, where multiple users’ ETH is combined into a single stake, allowing for better efficiency in staking and rewards distribution. In return for depositing ETH into Rocket Pool, users receive an ERC-20 token, rETH, representing their network stake. rETH is a tradable token and can be held, transferred or sold like any other ERC-20 token.
LDO/RPL Similarities
Staking Infrastructure: Lido DAO and Rocket Pool offer decentralized staking infrastructure allowing users to pool their funds together and participate in Ethereum 2.0 staking. This allows smaller ETH holders to earn rewards without overcoming the 32 ETH barrier.
Tokekensized Stakes: Both platforms issue tokens that represent users’ staked ETH. Lido DAO issues stETH, while Rocket Pool issues rETH.
Risk Distribution: Both aim to mitigate risks associated with Ethereum 2.0 staking by employing a network of node operators. This distribution of responsibility reduces reliance on a single validator and provides increased security and performance for staked funds.
LDO/RPL Differences
Operational Approach: Lido DAO operates as a single, unified pool where users can deposit their ETH in a shared staking pool where a pool operator handles the staking process. In contrast, Rocket Pool functions as a network of individual node operators who stake users’ ETH independently, making it the more decentralized of the two.
Token Models: Lido DAO issues stETH token in exchange for the user’s deposited ETH. The stETH represents a user’s stake and can be freely traded and transferred. In Rocket Pool, rETH represents ETH and is used as the DAO’s governance token.
Network Design: Lido DAO focuses on Ethereum 2.0 staking exclusively, providing a simplified and accessible solution for users to stake their ETH. In contrast, Rocket Pool aims to be a multi-chain staking protocol, expanding its scope beyond ETH.
