# 📑 Glossary

You may stumble upon some unfamiliar concepts in the Rocket Pool documentation. This section lists the common terms in the documentation for easy access, learning and plugin/theme development.

# APY - Annual Percent Yield (APY):

The amount of profit (yield) calculated over a one-year period divided by the initial investment amount expressed as a percentage.

# Bonding

See insurance.

# Contract, (Smart)

An ethereum program (smart contract) that is used to perform a set of programmed functions. Rocket Pool smart contracts include the deposit pool, minipool validator formation, and issue and track various token interactions on the ethereum chain.

# Client

A client is an implementation of Ethereum software that verifies all transactions in each block, keeping the network secure and the data accurate. See also eth1 client and eth2 client.

# Custodial

Centralized service that manages the entire ETH staking process on behalf of the user and retains quote custody quote over private validator keys in withdrawal keys. See also non-custodial.

# DAO (Decentralized Autonomous Organization)

An organization represented by rules encoded as a computer program that is transparent, controlled by the organization members, and not influenced by a central government.

# Deposit Pool

The amount of ETH ready to be staked. The deposit pool is funded by regular users when they swap ETH for rETH. This ETH is the amount that awaiting to be paired with node operators in the node operator queue.

# ETH

The fundamental cryptocurrency coin generated and used by the Ethereum protocol.

# eth1.0

The original Ethereum 1.0 protocol that uses a consensus mechanism known as proof of work (PoW) and uses miners to validate the block-chain.

# eth1 Client

Ethereum Software clients that run the eth1.0 network.

# eth2 Client

Ethereum Software clients that run the eth2.0 network.

# eth2.0

The Ethereum 2.0 network and update to the Ethernet network that was launched in December 2020 and will replace the older proof-of-work eth1.0 consensus mechanism.

# Insurance

The amount of RPL token, expressed as a percentage of the value of ETH staked by the node operator, that a node operator needs to deposit when they start a minipool validator. The RPL insurance staked by a node operator will act as insurance to reimburse regular uses in the event that the node operator exits staking with less than 16 ETH in their validators.

# Minipool (Validator)

A validator that was funded and initialized via the Rocket Pool software. It is most commonly composed of an equal amount of ETH contributed from regular users via the deposit pool and ETH contributed from node operators during their registration process.

# Node

In the ethereum network, nodes are devices (computers) that run an ethereum client software.

# Node Commission

The amount of supplemental ETH awarded to a node operator. This is effectively the “fee” that is taken from normal stakers; in Rocket Pool, that fee is given to the node operators. This value is determined by the number of node operators and the amount of ETH available in the deposit pool. It can range from 5 - 20% with the ideal target of 10%. Each minipool’s commission will be locked for life upon the creation of the minipool.

# Node Commission, slippage

The amount of negative slippage in node commission that a node operator is willing to accept when forming a minipool validator. Slippage is the difference between the commission rate shown and the commission rate you are willing to accept when the transaction completes. The amount of negative slippage tolerated is chosen by the node operator when they initially form a minipool validator.

# Node Operator

An individual that wishes to secure the Ethereum network by operating a node (computer) that will run the Rocket Pool software, an eth2 validator client, and optionally an eth1 and eth2 beacon client as well. Node operators will earn ETH APY rewards at a greater rate than solo-stakers on the Ethereum 2.0 network.

# Node Software

A set of programs that allow node operators to interact with the Rocket Pool protocol.

# Node Wallet

An eth1 wallet that is generated by Rocket Pool upon creating a new node. This wallet will be used to fund new minipools during their creation and pay for the gas fees needed to interact with Rocket Pool’s smart contracts.

# Non-Custodial

A service that provides streamline beef to validator set up in management but does not hold user private validator keys and withdrawal keys. Rocket Pool is a non-custodial staking service.

# Oracle DAO (oDAO)

A DAO composed of all the oracle node operators. See also DAO.

# Oracle Node

A special node run by trusted members of the Rocket Pool community that relays information from the ETH2 beacon chain (such as total staking rewards and validator exit status) back to the ETH1 chain so the Rocket Pool smart contracts can function correctly.

# Proof-of-Stake (PoS)

The consensus mechanism used in eth2.0, where users vote on the correctness of new blocks by staking the ETH in their wallet.

# Proof-of-Woork (PoW)

Proof of Work (PoW) is the mechanism that allows the decentralized Ethereum network to come to a consensus, or agree on things like account balances and the order of transactions. Proof-of-work is the underlying algorithm that sets the difficulty and rules for the work miners do.

# Protocol DAO (pDAO)

The DAO composed of all holders of RPL tokens. See also DAO.

# Regular Node (Operator)

The term given to “normal” node operators that do not have the additional responsibilities of Oracle Nodes.

# Regular Stakers

A retail (regular) user that wants to earn interest on their ETH coin without decoupling it from the underlying value of ETH. A regular staker interacts with the rocket pool platform by swapping ETH coins for rETH tokens. Their ETH is entered into the staking pool, where it is acquired by Node Operators when they create new minipools.

# Re-Insurance Pool

A deposit pool where the holder of RPL tokens can deposit their RPL for use by the rocket pool network to earn an APY. The collective supply of RPL deposited into this pool will act as a second layer of insurance to reimburse regular uses whose initial ETH deposit may have been lost due to a minipool exiting with less than the sum of 16ETH plus any RPL insurance held by the node operator. (Note not operational during initial launch)

# rETH (Rocket Pool Staking Deposit Token)

A token that represents a regular user’s deposit into the staking pool. Users receive an equivalent value of rETH token for each ETH coin they deposit. As interest is earned by staking on the ethereum network the value of the rETH token increases with respect to ETH. This token does not need to be locked within the network and it can be traded, sold or held as the user desires.

# RPL (Rocket Pool Token)

This is a token issued by the Rocket Pool contract. It serves two purposes: first, as supplemental insurance against slashing that Node Operators are required to provide before creating new minipools; second, as the governance token used to vote in the Protocol DAO.

# Stake

An amount of coin or token that is deposited as an assurance collerator to perform some work. An individual can stake ETH either as a regular user by swapping ETH for rETH or by as a node operator when depositing ETH for use as part of the eth 2.0 PoS consensus process. A person who stakes their ETH (e.g. a staker) is rewarded with an APY or return on their deposited ETH.

# Staking Pool

A staking pool allows multiple ETH coin holders to combine their tokens to collectively form the required to run an eth2 client. Rook Pool forms, tracks, assigns, and insures these collective pools using a non-custodial decentralized method.

# Validator

See minipool.