[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
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