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STAKING POOLS: LIDO VS ROCKET POOL VS STAKEWISE

May 17
Written By Siyu Ren Heinrich

Written by: Siyu Ren Heinrich

Reviewed by: Michael Martin

In April 2023, Ethereum had two successful upgrades: the Shanghai upgrade,
enabling staking withdrawals, and the Capella upgrade, a major upgrade to the
Beacon Chain.

As a result, staking ether (ETH) is becoming increasingly popular. Staking your
crypto allows you to earn interest on your digital assets, kind of like how you
earn interest in fiat currency when you deposit it in a bank. When you stake
crypto in a pool, you participate in the validation and continuation of a
blockchain network and get paid for this work. 

In this comparison, we examine three of the biggest liquid staking platforms for
the Ethereum blockchain network: Lido, Rocket Pool, and StakeWise.


New to staking? Start here: What Is Staking and How Does It Work?



Highlights:

 * Lido is the largest liquid staking protocol in terms of total market share,
   offering staking on multiple blockchain networks.

 * Lido, Rocket Pool, and StakeWise are all well-established protocols that have
   demonstrated their reliability and success. 

 * All 3 platforms have high-security standards.

 * Current annual percentage rates (APR) for liquid staking ether (ETH) are:
   Lido - 6.7%, Rocket Pool - 7% / 5.69%, and StakeWise - 7.2%.

 * All 3 protocols support self-custody staking.


ETH STAKING POOLS: KEY STATISTICS AND FACTS

According to data from Dune:

 * Over 19.1 million ether (ETH) are currently being staked, which represents
   about 16% of the total ETH supply.

 * More than 600.000 validators process transactions and add new blocks to the
   blockchain.

 * Staked ETH Sources: Liquid staking: 36%, centralized exchanges: 23%, staking
   pools: 15%

 * 6.7 million out of the total 19.1 million ETH are currently being staked in
   Lido, Rocket Pool, and StakeWise. As the following chart shows, Lido holds
   the lion's share of this.





Source: Dune.com

New to liquid staking? Check out our beginner’s guide on liquid staking


WHAT IS LIDO?

Lido Finance was launched in December 2020. It is an open-sourced DeFi
(decentralized finance) liquid staking protocol running on 5 different
blockchain networks. 

Lido currently supports the staking of ETH (Ethereum), MATIC (Polygon), and SOL
(Solana). 

Lidos' market share is more than 31% ether, making it the largest ETH liquid
staker on the market. 

Lido currently offers a staking annual percentage rate (APR) of 6.7% for ETH,
and charges a 10% protocol fee on rewards. There is no minimum amount of ETH
required.

Lido offers a liquid staking token: $stETH. This token represents staked
Ethereum in Lido, combining the value of the initial deposit + staking rewards. 

The $stETH token can be used in Lido’s broad ecosystem, which includes more than
20 decentralized applications (dApps) such as Curve, Trust Wallet, and Yearn
Finance. 

The liquid staking tokens $stMATIC and $stSOL have also been integrated with a
number of DeFi and CeFi applications.

📖 Read! 5 Best Ways to Stake Your Ethereum


LIDO GOVERNANCE TOKEN: LDO

The $LDO token is an ERC20 token. It allows holders to vote on the decisions of
different parameters of the Lido staking protocol which is governed by the Lido
DAO. At its launch, 1 billion tokens were minted. At the moment 88% are in
circulation. 


LIDO SECURITY

Lido is regularly audited by a number of security companies and posts all the
reports on its website. In the most recent audit from April 2023, 2 critical
severity, 8 high severity, 17 medium severity, and 93 informal severity issues
were found. These issues have either been fixed or acknowledged by the
developers. Lido open-sources its code on GitHub and has a bug bounty program.


WHAT IS ROCKET POOL?

Launched in November 2021, Rocket Pool is a decentralized staking protocol for
Ethereum. Currently, it is running on the Ethereum network only. 

As of today, Rocket Pool is the second largest liquid staking pool for Ethereum,
accounting for 2.8% of the total market share.

There are two ways to stake with Rocket Pool:

 1. Stake and run node: anyone with a minimum of 8 ETH can stake and run a node.
    This method offers a staking annual percentage rate (APR) of 7%, higher than
    the stake-only model.

 2. Stake: anyone with 0.01 ETH can stake and receive $rETH tokens. More than 10
    DeFi applications such as Bancor, Metamask, and Aave integrated $rETH in
    their services. What is special about this model is that the ETH staked is
    non-custodial, which means if node operators do not behave honestly, they
    lose their rewards. This does not affect $rETH holders. The staking annual
    percentage rate (APR) this model currently offers is 5.96%.

The commission fee Rocket Pool takes from staking rewards varies from 5% to 20%
depending on how many node operators there are to stake ETH and how many ETH
need to be staked.


ROCKET POOL GOVERNANCE TOKEN: RPL

$RPL is Rocket Pool’s primary protocol token. It is used in the governance of
the protocol and can also be staked on a Rocket Pool node. When it is staked, it
acts as a form of insurance, basically ensuring good behavior.  The more $RPL
that is staked, the more rewards the node operator receives. 19.4 million tokens
have been minted, all of which are in circulation.


ROCKET POOL SECURITY

Rocket Pool’s codes and smart contracts are open-source. You can find them on
Rocket Pool’s GitHub. The protocol does regular security audits which they share
in this overview. The most recent audit is from January 2023. 1 critical, 4
major, 7 medium, and 7 minor security issues found. These issues have either
been fixed or acknowledged by the developers.


STAKEWISE

StakeWise launched in March 2021. It is currently the fourth largest liquid
staking protocol (just behind Frax Finance) with a total market share of 0.4%. 

The protocol allows for non-custodial staking and does not impose a minimum ETH
stake requirement.

StakeWise’s current Ethereum staking annual percentage rate (APR) is 7.72%. The
platform collects 10% of generated profits as a fee. Currently, StakeWise has a
dual token model which is based on $sETH2 and $rETH2. 

$sETH2 represents stakers' deposits in StakeWise Pool on a 1:1 ratio. $rETH2
represents depositors' ETH rewards in StakeWise Pool. In Q3 2023, StakeWise will
switch to a single token model and introduce $osETH.


STAKEWISE GOVERNANCE TOKEN: SWISE

$SWISE is an essential part of the StakeWise DAO and is used for governance. It
allows holders to vote for various aspects such as protocol fees and contract
changes. $SWISE has a max supply of 1 billion tokens, of which around 26.1% are
currently in circulation. 


STAKEWISE SECURITY

StakeWise has had several security audits carried out in the past. The last was
in September 2022. At that time 0 critical, 2 medium, 6 low severity issues were
found. Some of which, according to the developers, have already been fixed or
are intentional functions. StakeWise codes are open source on GitHub. The
protocol also has a bug bounty program.


COMPARISON: LIDO VS. ROCKET POOL VS. STAKEWISE




FAQS


WHAT ARE STAKING POOLS?

Staking pools democratize the process of staking crypto. In order to become an
Ethereum validator, you need to have certain hardware and a large amount of
cryptocurrency. Staking pools are decentralized protocols that pool together
investors' crypto and stake it on their behalf using the nodes of the protocol.
This enables individuals to participate in staking even if they do not meet the
individual requirements for becoming validators.


WHAT IS THE DIFFERENCE BETWEEN CLASSIC STAKING AND LIQUID STAKING?

In classic staking, crypto is locked up in a staking pool. Liquidity staking
protocols give their users tokens that represent the value of their crypto
staked in a pool. Users can then use these tokens on other platforms (lending
platforms, decentralized exchanges DEXs, etc). 


WHAT IS A LIQUID STAKING DERIVATIVE?

A liquid staking derivative is a token that represents cryptocurrency currently
staked in a staking pool. In Lido, tokens that represent staked ether are called
$stETH tokens.


WHAT IS THE BEST STAKING POOL?

It is not possible to generalize which is the best staking pool. However, you
can find the best pool for you if you consider a few important aspects of
different protocols and weigh them according to your expectations and
requirements:

 * Minimum staking amount

 * Annual percentage rate (APR)

 * Protocol fees

 * Custodial / non-custodial

 * Protocol security


HOW DO STAKING POOLS MAKE MONEY?

Staking pools make money by charging users a fee for staking crypto on their
protocols. 


IS THERE A RISK IN USING STAKING POOLS?

Yes, there are several risks when it comes to using staking pools. Some risks
include faulty smart contracts, price risks, and slashing risks. To learn more
about this check out our in-depth beginners’ guide on liquid staking. 


IS LIDO STAKING NON-CUSTODIAL?

Yes, Lido is non-custodial for deposits made after July 15th 2021. However,
withdrawals and becoming a node operator are not permissionless at the moment. 


CAN I STAKE ETHEREUM ON ROCKETPOOL?

Yes, you can stake ethereum (ETH) on Rocketpool. When you stake ETH on
Rocketpool, you receive a liquid staking derivative token, rETH, that can be
later redeemed for your staked crypto + rewards.

Siyu Ren Heinrich

5 years of experience in crypto research of writing practical blockchain and
crypto analysis on Medium.

MSc in Computer Science, BSc in Smart Engineering, and BSc in Economics and
Statistics.

https://www.tastycrypto.com/ren-heinrich

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