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4.2
RPL
RPL is the Rocket Pool native token. As with all ERC-20 tokens, if you are minting/buying/trading RPL, first verify the token is from the proper contract. Tokens are not required to have unique names!
RPL is not just a governance token.
Initial/Continual Protocol Funding
RPL was the token used for initial funding of the protocol. It was sold pre-launch to allow developers to work full-time on RP in the hopes that utility would drive an increase in value. It is also used to fund current team members, the oDAO, and the pDAO for ongoing protocol tasks.
18,000,000 initial RPL were created with 5% annual inflation. The inflation rate is adjustable by the protocol. The 5% annual inflation is then divided as follows:
The oDAO rewards are distributed equally to all oDAO members (see lesson 7.2). The pDAO rewards (more in lesson 7.1) are further divided:
The core team is paid from the original ICO funds, by running oDAO nodes and as of RPIP-37, directly by the pDAO. Note that the oDAO is being phased out in stages as current state of the blockchain allows and all development will eventually be paid solely from the pDAO treasury.
RPL Unlocks Commissions for Node Operators
With new tokenomics currently in development, the following is subject to change.
RPL is needed for Node Operators to start a minipool. A minimum of 10% of the borrowed ETH's worth of RPL is required. Borrowed ETH is the ETH a Node Operator gets from the Deposit Pool to match their bond in order to create a 32 ETH validator.
The Node Operator must stake the requisite amount of RPL as part of the Node setup.
For a minipool that uses 16 ETH from the Node Operator (bond) and 16 ETH from the deposit pool (borrowed), at least 1.6 ETH worth of RPL must be staked. For the 8 ETH bonded minipool, where 24 protocol ETH is borrowed, the Node Operator must stake at least 2.4 ETH of RPL.
RPL is staked at the node level, so if you stake 3.2 ETH's worth of RPL and have two 16 ETH minipools, each is 10% collateralized . You can not choose one pool to be more than 10% and one less.
Let's look at a more complex example:
What is the minimum RPL you would need to stake on a node with one 16 ETH minipool and two LEB 8 minipools? Each pool requires at least 10% of the borrowed ETH:
So, 6.4 ETH of RPL would be required to start one 16 ETH minipool and two LEB8s.
It is possible, due to RPL's changing value, that a node operator could fall below the 10% mark after their pool has been created. They will not be required to top off the RPL staked, however, they will no longer accrue RPL rewards until they rise above 10% again. More RPL can always be added, however, to come into compliance. ETH rewards are unaffected by RPL collateral.
Because RPL is required for a node to start minipools and thus get the Node Operator fees, staking RPL unlocks rewards in the form of the commission.
RPL as Insurance/Collateral
In theory, staked RPL could act as collateral to protect the value of rETH and in this sense, RP has the best ratio of insurance to bond of any staking protocol currently in operation. In the event of a node being penalized/slashed, the lost funds would in principal come from the Node Operator bond and when that was depleted, from RPL staked. However, currently, for small slashings (those from a single operator error), RP does not confiscate RPL. For larger slashings (>= 8 ETH, i.e., coordinated slashings), the Node would be exited as part of the slashing and the RPL could then be confiscated.
The issue is that, in such a large slashing case, the RPL being sold off en masse to repay rETH holders would likely drive the RPL price so low it would lose effectiveness for this very purpose.
The better potential use of RPL in an insurance or collateral sense is use against MEV theft. Section 5.3 goes into MEV and MEV theft in slightly more detail, but effectively, a rogue Node Operator could simply steal the MEV forever. RPL could provide some protection against that because Rocket Pool would penalize the RPL collateral of a MEV stealing NO and auction off the RPL.
In practice, this is not yet done in the protocol and would possibly require forced exits to stop the rogue Node Operator from stealing more than the amount of RPL collateral they have staked.
Governance
RPL is also a governance token. Staked RPL is required for pDAO governance, thus, at this time, only Node Operators can vote on Rocket Pool Improvement Propositions (RPIPs) - although anyone is welcome to talk in the DAO discourse forum.
The number of votes is a function of the amount of staked RPL a node has, currently defined as the square root of staked RPL divided by two. This is referred to as quadratic voting. The intent is to slightly dilute the control of the DAO by RPL whales, while also recognizing the larger total effect these votes might have on their funds.
Old RPL
Be aware that there was an update to the protocol that required a contract change for the RPL token. This means that there is an "old RPL" token under a different address. You are unlikely to come across it, but if you do or you already have some, it can always be exchanged on the RP website at 1:1 with current RPL.
End of lesson 4