Rocket Pool Bets Coinbase Deal Will Help it Catch Lido
Liquidity Staking Race Ratchets Up as Rocket Pool Members Size Up Latest Move
By: Aleksandar Gilbert •Dive
The liquidity staking race just got a lot more heated.
On Thursday, Coinbase Ventures, a subsidiary of the U.S.’s largest centralized crypto exchange, said it planned to join forces with Rocket Pool’s powerful Oracle DAO. The move may help RocketPool gain ground on its rival Lido.
With almost $500M in TVL, Rocket Pool is the third-largest liquid staking entity, behind Lido and Coinbase itself. It is popular with hardline advocates of decentralization, some of whom view its competitors with suspicion.
Rocket Pool has a dual governance structure, with responsibilities split between two decentralized autonomous organizations, or DAOs. Among other things, members of the Oracle DAO run Rocket Pool nodes — the technology required to stake Ether — and vote on Rocket Pool contract upgrades. In return, they are compensated in RPL.
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“[Members] have a ton of power, but not as individuals, only as a majority of the group,” Valdorff, the pseudonymous treasurer of Rocket Pool’s incentives committee, told The Defiant via Discord Thursday.
“Some members see themselves in a stewardship role and use their influence to help the protocol and its mission of securing the network in a very decentralized manner,” they said. “Some members are much more passive and mostly lend the association with a respected name.”
Jasper, Rocket Pool’s pseudonymous community advocate, said membership “often is a Launchpad for further collaboration, especially given the [RPL] rewards members earn.”
In a statement shared by Rocket Pool General Manager Darren Langley Wednesday, Coinbase Ventures said it was “excited to support Ethereum staking decentralization.”
But some question a partnership with one of the most prominent centralized entities in the industry. A Coinbase employee introduced himself Wednesday after several years “lurking” in the Rocket Pool Discord to say he was an admirer of the protocol and looking forward to the partnership. One member of Rocket Pool’s Discord wondered aloud how many other Coinbase employees had “infiltrated” DeFi protocols.
The employee, Coinbase’s Will Robinson, said he understood the suspicion but asked that others in the chat not view him as an infiltrator.
“Fwiw, there’s no plots within plots here,” Robinson wrote. “We’re happy to help, we’re aligned with the RP mission and philosophy broadly (though of course there will be tensions, questions of degree, tradeoffs — the world is a messy place!). And we’re shaped in such a way that we sincerely believe we can help by being reliable, responsive, faithful oDAO members.”
Valdorff believes there is a risk, however remote, to adding any centralized entity to the oDAO.
“Coinbase is a clear legal entity based in the US,” he told The Defiant. “They’re not alone in this, and having too many that meet this description could potentially be a problem if there’s unforeseen government intervention. I suspect the oDAO would act to add members or even remove themselves as needed if there were a real threat here.”
Coinbase’s addition hasn’t frightened investors. Rocket Pool’s RPL token jumped almost 8% after the announcement, and some of its fans celebrated the fact it hit an all-time high relative to the price of Ether.
“Coinbase is a household name and having their engineers securing data gives the protocol legitimacy to some institutions,” Jasper said. “Further, the whole ecosystem is getting a boost.”
Liquid staking protocols got another boost Friday when MetaMask, one of the world’s most popular crypto wallets, announced users could now stake Ether through Lido or Rocket Pool on the MetaMask app.