[RFC] Collateral Basket Change Proposal: Adding Rocket Pool ETH (rETH) to the Based ETH Collateral Basket

Based ETH (bsdETH)
1

Summary

This proposal seeks to add Rocket Pool ETH (rETH) to the bsdETH collateral basket, enhancing basket decentralization while creating mutual incentives for bsdETH adoption.

Abstract

Rocket Pool ETH (rETH) was the first Ethereum LST protocol to implement permissionless nodes and remains the most decentralized LST. From day one, its goal has been to be fully permissionless and trustless.

rETH is already included in ETH+, making it a logical addition to bsdETH as well. rETH has established deep liquidity on Base and is integrated with major DeFi protocols. Additionally, its interoperability and the upcoming Saturn upgrade will further enhance rETH’s performance on Base.

Problem

The current bsdETH basket of ETH LSTs faces a centralization challenge in its implementation. cbETH, being an LST from centralized exchanges, relies on self-operated node operators. While wstETH and wsuperOETHb use Distributed Validator Technology (DVT), they still have limited node operator numbers and diversity. For Ethereum, greater decentralization directly enhances network security—a core principle that LSTs should follow.

Rationale

rETH achieves 100% permissionless node implementation, featuring numerous solo validators, making it the most decentralized LST in the ecosystem.

Node Decentralization Comparison

  • wstETH: ~5% permissionless nodes through Community Staking Module
  • wsuperOETHb: 100% permissioned nodes, based on SSV DVT
  • cbETH: 100% permissioned nodes, centralized LST
  • rETH: 100% permissionless nodes

rETH is steadily growing on Base with increasing liquidity and depth. Currently, its largest liquidity pool is on Balancer with 7.8M, second only to wsuperOETHb.

Liquidity Comparison

Adding rETH to bsdETH would enhance diversity and decentralization of the basket while further improving depth.

Furthermore, the Rocket Pool GMC has approved the Star project, providing incentives to DAOs that mint and adopt rETH. The current incentive rate is 0.05% for the first 10,000 rETH, and 0.025% thereafter. These incentives could be utilized through DeFi protocols to boost bsdETH adoption and growth.

Proposed Allocations

Option 1:

  • cbETH: 25%
  • wsuperOETHb: 25%
  • wstETH: 25%
  • rETH: 25%

Option 2:

  • wsuperOETHb: 30%
  • wstETH: 25%
  • rETH: 25%
  • cbETH: 20%

This reallocation would convert approximately 1,000 ETH to rETH, generating around $1,000 - $1,500 RPL incentives that could be used to drive bsdETH growth.

Conclusion

We welcome questions and feedback from the Reserve community regarding rETH. Adding rETH to bsdETH would benefit both the Rocket Pool and Reserve communities while contributing to Ethereum’s decentralization efforts.

  • I am in favor of adding rETH to bsdETH collateral
  • I am not in favor of addingrETH to bsdETH collateral
0 voters
1 Like
2

Thanks for taking the time to dive into the Reserve Protocol and write this proposal @signal.

I’m encouraged by this proposal for a number of reasons:

  • The improvements to basket decentralisation and liquidity depth while maintaining a similar yield profile to the previous incumbents cbETH and wstETH
  • The view or llama risk that rETH is a well-rounded LST product
  • The fact it’s already included in the ETH+ collateral basket

I do however have two concerns:

  1. While we have the rETH plugin live on mainnet, this isn’t live on Base. For the past year, given the volume of integration request and the limited bandwidth, asset issuers that want to benefit from inclusion in RToken baskets have developed their own collateral plugins themselves. I will link the relevant docs below. The core team will support through the audit process and finally complete back-testing in house prior to whitelisting.

Would the Rocket Pool team be happy to develop this plug for rETH to be included in the bsdETH collateral basket?

  1. I appreciate the additional incentives you have proposed via the Star Project however feel that 0.05% is rather low and won’t sweet the deal enough to move this through governance at pace. Please see the ETHx proposal from Stader where they supplemented the yield from 3% to 5% for the first 90 days. I feel something along these lines would more favourable to RSR stakers.

With regard to basket allocations i’m hesitant to reduce wsuperOETHb given it’s yield profile and liquidity depth so i’m more in line with option 2, dependent of course on any additional incentives you can offer.

Relevant docs for collateral plugins: