Rocket Pool (RPL) goes through a high-volume rally; will it launch re-staking?

Rocket Pool (RPL) suddenly rallied, revisiting prices above $30. After trading at the second-highest volume in its history, RPL is now close to its higher range. 

Rocket Pool later retreated to $27.25, though supported by community enthusiasm for another rally. The Rocket Pool project is in the spotlight for its potential to join the liquid re-staking trend, which is the fastest driver of value in DeFi. Rocket Pool has not confirmed the re-staking rumors, but the community is already discussing the possibility. 

However, the immediate reason for the RPL rally is the Houston upgrade, which goes live this Monday. Rocket Pool was seen as one of the most promising liquid staking protocols, supporting the Ethereum network with thousands of nodes. rETH is also among the most widely circulated liquid staking tokens. However, Rocket Pool aims to break out of its stagnant position and catch up with new trends in DeFi. 

Houston update contains the possibility of re-staking

The Houston upgrade resolves several technical matters regarding addresses and transactions. Additionally, the proposal will bring a new implementation of OnChain pDAO. Rocket Pool has discussed the latest changes for the past six months and finally reached a milestone with the introduction of the Houston update.

Read: Eigen Layer holds more than $20B in reported value: Riskier than meme tokens?

The most crucial update is RPIP-32: stake ETH on behalf of a node. At its core, this proposal allows an address to deposit ETH to a node, where the node can then make deposits using the provided tokens. 

The Houston upgrade has not specified the use cases for this staking mechanism. Some of the possibilities include third-party pools and smart contracts, where deposits of ETH can be made. Staking-as-a-service, DAO treasuries, and custodial smart contracts are some of the potential use cases. The proposal may increase the value locked on Rocket Pool, while also allowing the creation of re-staking protocols. 

The new staking and deposit proposal suggests that any ETH deposited will be accounted for separately and can be withdrawn at any moment. The new protocol will help the value of building on Rocket Pool, already at $4.45B. Rocket Pool has been trending since May, on the back of Ethereum (ETH) appreciation and the run-up to the Houston upgrade.

Rocket Pool to improve tokenomics

Rocket Pool is also preparing for an update to its tokenomics. Rocket Pool is updating its tokenomics, removing RPL as a reward for node operators and reducing inflation to 1.5% from 5%. Node operators will also not need to hold an RPL stake. 

Rocket Pool is among the biggest supporters of the Ethereum network, adding multiple nodes as a share of more than 1M validators. Rocket Pool is outperforming other Liquid Staking Token producers offering re-staking. After the Houston update and the subsequent Saturn update, Rocket Pool hopes to grow its influence and value. 

In June, rETH has a supply of more than 500K, while also trading a premium of $3,965.03. After the tokenomics overhaul, Rocket Pool supporters expect to see RPL prices rise with the introduction of token burns. 

After the update, Rocket Pool node operators will not have to hold RPL as part of their stake. Instead, they will hold RPL selectively for voting rights. The protocol’s fees in RPL will also be either redistributed to the DAO or burned. 

Also read: Rocket Pool Price Prediction 2024-2030: Is RPL A Good Investment?

Rocket Pool required RPL holdings for nearly three years, driving the main demand for the token. Now, RPL will have to rework its inflows and value proposition. Some predictions see RPL as becoming more valuable, despite not being a requirement to run nodes. 

Rocket Pool’s main ambition is to out-compete other protocols that secure the Ethereum network. This would still depend on the value locked and the eventual introduction of Layer 3 or re-staking. 

Based on market capitalization, RPL is still the second liquid staking protocol after Lido DAO. Now, the token will also have to defend its positions after rallying by a net 35% in the past week. 

Cryptopolitan reporting by Hristina Vasileva