Wrote a thread on why I think RPL tokenomics are

detrimental to Rocket Pool’s mission. I know it’s not Frax content, but I think it’s important for us to be informed on the LSD landscape: https://twitter.com/stablescarab/status/1659369233787269122?s=46&t=zQRpj7NrVnetG4cXCy8ZMw

I generally tend to agree with your view of staking RPL makes it costlier for Rocket Pool NOs. But I think that is the actual intent, no? To give some utility and demand by making it fuel for using Rocket Pool's infrastructure.

the current tokenomics make it less of a fuel and more of a stimulant creating higher highs and lower lows. fuel suggests value accrual of which there is none. all value in the system comes from eth staking and rpl doesn’t take a cut of it. I’ve seen this play out in multiple node running projects. it’s unsustainable

First of all, I agree with you that this method is not really the ideal way to accrue value to an LSD gov token. I agree either fees/burns to RPL would make more sense. That is a less complicated and costly method of accruing value to the utility token. But, having said that, their mechanism does actually create demand for locking RPL because it channels demand for rETH (which itself creates demand for NOs) into demand for staking RPL. This is actual value. It's not much but it does create non-zero value for RPL at the cost of making running a Rocket Pool node a bit more cumbersome and expensive. Ideally it would be better to do the more elegant fee/burn mechanism or some kind of boosting system like veCRV and veFXS do for their yields. For veFXS we are exploring both sfrxETH boosties (like farming boosts) as well as the already planned veFXS yield distribution of the protocol fees after we reach FRAX's 100% CR. I think in comparison, those are more efficient mechanisms that align incentives, aren't mandatory for running nodes, and generally bring utility to FXS without any costs.

can you explain what you mean by “RPL channels demand for rETH”?

Rocket Pool's "product" is a software suite for running your own ETH validator by only putting up 8E to do so rather than 32E. This is a product people are willing to pay for (aka they pay a fee from the earnings they make by using it back to Rocket Pool). Rocket Pool's other "product" is a yield bearing stablecoin called rETH. Whether they know that or not, it is a stablecoin and attains monetary premium by being integrated in different places in DeFi which is a sticky network effect. rETH itself is a product people are willing to pay for. That might not be as clear because the fees are taken from the PoS earnings before the yield goes to rETH holders so it might look like rETH holders don't pay a fee. But they do, it's just taken upfront. These are the two "products" Rocket Pool protocol offers. If using the first product requires you to lock up some RPL to use it, that does create some non-zero demand for RPL. Obviously, this just means they increased the price tag of using their first product. That's why I said this isn't an ideal way to accrue value to RPL but it does accrue non-zero value to RPL.

Rocket pool node operators do not pay a fee to rocket pool? Only the rETH holders pay a fee (which goes to the node operator). Also I feel like your missing the main purpose of RPL… it’s acts as the main insurance against slashing. Without RPL, rocket pool has A LOT more problems distributing eth to random, anon node operators and still having any sort of assurance that idiot node operators won’t blow a huge hole into the collateral backing rETH.

They would just blow a hole in their own eth and then get ejected

One of the problems with the first (staking RPL to run a node) is it's non-recurring and quasi-fixed in terms of absolutely amount though, right? Like the number of node operators can't and won't scale to infinity since ETH itself is deflationary. So there's a theoretical max of RPL that could ever be demanded by NOs which seems like a different and pretty limited sort of demand.

Let me be more specific about what I mean by "fees." At its most abstract sense, Rocket Pool is a 2 sided lending market: People lend ETH and get rETH as their receipts. Like lending ETH into Aave and getting out aETH. Node operators borrow 32 ETH from lenders to spin up a validator. To do that, they have to put up 8 ETH as collateral for every validator they borrow. Now my point is this: the borrowers (node operators) pay interest to the lenders (ETH depositors that hold rETH as their lending receipt token). It's as simple as a lending market. If I've missed something or misunderstood, please correct me. This is how I understand Rocket Pool.

I mean I guess this characterization isn’t wrong but it’s very strange… I have never heard of someone equating a LSD protocol to a lending market. And this is a very weird lending market because the “borrowers” pay 0 borrowing fees

Are you running a Rocket Pool node right now?

Ya, for a long time now

When you went to run a node, you only put in 8 ETH right? Did you get out any rETH?