Background

Rocketpool

Founded in 2016, Rocketpool is an ETH2 staking pool that has a goal to help decentralize the ETH2 network.

In order to validate on the ETH2 base network, one would need a minimum of 32 ETH and a computer with at least 4 cores and a minimum clock speed of 2.8 gigahertz. With large hurdles, such as these, it risks the decentralization of the ETH2 transaction validators.

In order to address these decentralization risks, Rocketpool allows users with as little as .01 ETH to stake their ETH, and people with at least 16 ETH to run a node. This lowers the barrier to entry into the ETH validation world, increasing the decentralization. Staked ETH is converted into rETH, which are then delegated to the node operator. Rewards are paid out in the form of nETH: a 1:1 ratio of nETH to ETH.

The average reward that is paid out to users of Rocketpool is 4.03% APR on average for stakers and 6.36% APR plus a variable amount of RPL rewards for node operators.

Ethereum

Launched in 2015, Ethereum is one of the main blockchains. It is the second most valuable/traded crypto coin (after Bitcoin) and is described as "the world's programmable blockchain". ETH gained its popularity due to its smart contract abilities -- allowing for people to develop off of the blockchain.

The major drawback of ETH is that it currently is designed as a proof-of-work blockchain. This has faced some public drawbacks as validating transactions are expensive in both a monetary sense as well as an environmental sense. Electricity usage, and pollution have been popular topics when discussing traditional proof-of-work blockchains. This proof-of-work methodology has also caused transaction costs to be significantly higher than its competitors: with prices ranging between 5$-100$ between 2021-2022.

In the near future, Ethereum is switching to Ethereum2: a switch from proof-of-work to proof-of-stake. This will hopefully address the transaction cost issues as well as the environmental issues with validating transactions.

Lido

Founded in 2020, Lido is a liquid ETH2 staking pool that also has the goal to help decentralize the ETH2 network.

With Lido, one can stake any amount of ETH, with no minimum, and receive stETH (staked ETH) in return. The neat thing with Lido is that the stETH is completely liquid and one maintains control of their own ETH. This allows users to participate in DEFI, or other projects while still earning rewards on their staked ETH.

The rewards for staking ETH is a flat 4% APR on all stETH.

Comparison

Initially, we can see that for standard users, both Lido and Rocketpool offer ~4% return on staked ETH; however, Lido allows for users to keep their ETH liquid, which allows users to participate in other projects such as Defi. This can be more appealing for people who often interact with their ETH and are savvy enough to use Defi.

For larger holders of ETH, Rocketpool's node operation offers more rewards than Lido. It does, however, lock up your balance of ETH. So this would be more attractive to larger users who want to deposit their ETH and forget about it.

Let's take a look at whether or not the data agrees with this initial comparison.

When we look at the daily trend for number of unique users for Lido and Rocketpool, we can see that far more people use Lido than Rocketpool!

Taking a look at the Daily amount of ETH staked between each protocol, we see that the amount of ETH staked on Lido far surpasses Rocketpool on most dates; however, there are some dates where the amount is fairly comparable.

Between these two graphs, we see that the number of users and the amount of ETH staked on Lido is greater than Rocketpool.

Lets take a look at the average amount of ETH staked per user.

Even though Lido had many more users and a higher amount of ETH staked per day, we can see that the average amount of ETH staked per user is fairly similar for months outside of March - May. Rocketpool also is much more consistent with its averages, while Lido is much more variable.

Let's take look at some overall average comparisons for 2022 between Lido and Rocketpool

When we scroll through these averages, we can see - quite clearly - that Lido beats or is comparable to Rocketpool in almost every category. Lido, on average for 2022, has more daily users, more ETH staked, more ETH staked per user, more total stakes, and a comparable amount of stakes per user.

Conclusion

Overall, we can see that users tend to prefer Lido over Rocketpool in 2022. As the crypto space develops, people tend to want to do more with their crypto. Lido offers a liquid staking pool that allows people to both stake their ETH and participate in other projects, such as Defi.

Rocketpool locks in your funds and does not offer any substantial additional benefits. Our initial thoughts were that larger amounts of ETH per user would go towards Rocketpool, as they allow people to operate a node; however, out initial hypothesis was incorrect.

People tend to prefer Lido over Rocketpool.