Rocket Pool’s Saturn 1 upgrade vs Lido’s V3 modular staking

Rocket Pool leads in capital efficiency

Rocket Pool’s Saturn 1 upgrade establishes its dominance in the liquid staking market by maximizing capital efficiency for node operators. This upgrade follows an rETH 14% APY boost and a surge in the permissionless minipool queue past 4,000 node operators. The update reduces the bond requirement for megapool validators to 4 ETH, which previously required 8 ETH for minipools. The reduction in bond requirements from 8 ETH to 4 ETH allows the protocol to support a much higher volume of rETH and increases the commission earned per ETH bonded by node operators. This change allows the protocol to meet rising rETH demand. To manage the queue, the express queue provides one ticket for every 4 ETH a legacy operator has bonded in minipools. This system helps operators migrate to megapools without waiting in the standard queue. Megapools use a single smart contract per operator to manage multiple validators, which lowers the gas costs for managing rewards and validator activities. This follows the Saturn 0 upgrade from October 2024, which enabled ETH only minipools and allowed all staked RPL to become eligible for rewards. The Saturn 0 update also removed the 10% collateral requirement for all staked RPL.

Economic models and RPL demand

The economic structure of Saturn 1 provides direct value to the network through the Universal Adjustable Revenue Split. This system divides protocol ETH revenue from node operator commissions among four distinct groups.

Node operators who stake RPL on their megapools receive 9% of the protocol revenue. This distribution is proportional to the amount of RPL they stake. The protocol also provides RPL inflation rewards to these operators. This model creates natural demand for the RPL token because it increases operator earnings. In contrast, Lido faces difficulty with LDO because the token lacks utility beyond governance. Lido uses LDO to incentivize liquidity and pay bribes to millions of CVX holders every two weeks, which creates selling pressure. LDO holders decide node operators and fee distribution but do not receive protocol revenue. Lido’s stETH remains the largest liquid collateralized derivative, with over $5.1 billion locked in the Curve stETH-ETH pool. This liquidity helps stETH holders exchange their tokens for ETH. In the legacy Rocket Pool model, a node operator creates a minipool by depositing 16 ETH and collecting 16 ETH from users. The operator also pledges RPL worth at least 1.6 ETH to serve as security for the protocol. This RPL covers potential slashing losses via auctions. The Saturn 1 upgrade makes these requirements more efficient by allowing for 4 ETH bonds. You should observe how these economic incentives drive long-term stability.

Infrastructure risks at Lido

Lido remains the largest liquid staking protocol, but recent infrastructure issues at MetaMask reveal the risks of centralized validator management. MetaMask started exiting its Ethereum validators in the Lido protocol to mitigate risks from a security incident. This incident affected MetaMask’s infrastructure rather than user wallets. The final affected validators should complete their exit by the end of October. These exits result in foregone rewards and possible downtime penalties for the affected validators. Lido developers expect the exit process to take up to 45 days because of the extended entry queue. The current rETH APY boost of 14% makes the efficiency of Rocket Pool more attractive to users looking for stable yields. The exit process occurs in coordination with clients and partners. MetaMask stated that the incident did not threaten user wallets, but the company is addressing the threat internally. Does the security of the Lido validator set depend too heavily on the infrastructure of its largest partners?

Technical guardrails and megapools

The Saturn 1 upgrade introduces guardrails to reduce trust assumptions in the oDAO and pDAO. RPIP-58 limits the number of MEV penalties the oDAO can apply to minipools every week. RPIP-61 prevents the oDAO from changing the rETH exchange rate too frequently. RPIP-60 introduces a delay between a passed protocol upgrade and its execution to give users time to exit. These measures protect users from sudden protocol changes. Megapools change the operational reality for Rocket Pool nodes. A megapool contract acts as a single Ethereum withdrawal address for several validators. This design prevents the backward compatibility issues that plagued previous updates. The 4 ETH megapool setup increases commission efficiency by 2.3x compared to the 15% commission for 8 ETH minipools. This improvement results in a 35% commission rate for megapool operators. The Saturn 1 upgrade also introduces Forced Delegate Upgrades. This allows the protocol to iterate on megapool contracts without being hindered by backwards compatibility issues. This gives the pDAO more flexibility to improve the protocol over time. Additionally, RPIP-65 ensures that a proportion of ETH from new rETH mints flows into the rETH contract rather than the deposit pool. This keeps a buffer of 1% of rETH TVL to prioritize withdrawal liquidity.