A Node Operator's Responsibilities#

How Ethereum Staking Works#

As a reminder, staking in Proof of Stake is done via validators. A validator is essentially a single Beacon Chain address to which 32 ETH was deposited on the Execution layer. Validators are responsible for maintaining the consistency and security of the Beacon Chain. They do this by listening for transactions and new block proposals and attesting that the proposed block contains legal, valid transactions by doing some number crunching and verification behind the scenes. Occasionally, they get to propose new blocks themselves.

Validators are assigned attestations and block proposals on a randomized schedule. This is very different from the old Proof of Work system, where everyone was constantly trying to race each other and come up with the next block before everyone else. This means that unlike Proof of Work where miners weren't guaranteed to earn a block reward unless they found the next block, Proof of Stake validators are guaranteed to have slow, steady income as long as they perform their duties. If a validator is offline and misses an attestation or a block proposal, it will be slightly penalized. The penalties are quite small though; as a rule of thumb, if a validator is offline for X hours, it will make all of its lost ETH back after the same X hours of being back online.

Rewards#

Validators earn consensus layer rewards from Attestation, Block Proposals, Sync Committees (rare), and Slashing Rewards (vanishingly rare). They also earn execution layer rewards from Priority Fees and MEV.

As of 10/2024, overall APR is ~3.5%, with 2.8% being consensus layer APR, and 0.7% being execution layer APR. One place to find this info is the rated explorer.

Penalties#

Validators are penalized for small amounts of ETH if they are offline and fail to perform their assigned duties. This is called leaking. If a validator violates one of the core rules of the Beacon chain and appears to be attacking the network, it may get slashed. Slashing is a forceful exit of your validator without your permission, accompanied by a relatively large fine that removes some of your validator's ETH balance.

Realistically, the only condition that can cause a slashing is if you run your validator's keys on two nodes at the same time (such as a failover / redundancy setup, where your backup node accidentally turns on while your main node is still running). Don't let this happen, and you won't get slashed. Slashing cannot occur from being offline for maintenance.

Below is a table that shows the penalties that can happen to a validator:

Type	Layer	Amount
Missed Attestation	Consensus	-0.000011 ETH* per attestation (-9/10 the value of a normal attestation reward)
Missed Proposal	Consensus	0
Missed Sync Committee	Consensus	-0.00047 ETH* per epoch (-0.1 ETH total if offline for the whole sync committee)
Slashing	Consensus	At least 1/32 of your balance, up to your entire balance in extreme circumstances

*Varies based on the total number of validators in the network. Approximated for 435,000 active validators.

How Rocket Pool Nodes Work#

Unlike solo stakers, who are required to put 32 ETH up for deposit to create a new validator, Rocket Pool nodes only need to deposit 8 ETH per validator (called "bond ETH"). This will be coupled with 24 ETH from the staking pool (called "borrowed ETH", which comes from liquid staker deposits in exchange for rETH) to create a new validator. This new validator belongs to a minipool.

To the Beacon chain, a minipool looks exactly the same as a normal validator. It has the same responsibilities, same rules it must follow, same rewards, and so on. The only difference is in how the minipool was created on the execution layer, and how withdrawals work when the node operator decides to voluntarily exit the minipool. All of the creation, withdrawing, and rewards delegation is handled by Rocket Pool's smart contracts on the Ethereum chain. This makes it completely decentralized.

A Rocket Pool Node is a single computer with an Ethereum wallet that was registered with Rocket Pool's smart contracts. The node can then create as many minipools as it can afford, all running happily on the same machine together. A single Rocket Pool node can run many, many minipools. Each minipool has a negligible impact on overall system performance; some people have been able to run hundreds of them on a single node.

A minipool's upfront cost is 8 ETH. In addition, a node operator may stake RPL to their node to qualify for additional rewards and to gain voting power within the protocol DAO.

Rocket Pool Node Operators#

Node operators are the heart and soul of Rocket Pool. They are the individuals that run Rocket Pool nodes.

Responsibilities#

They put ETH from the staking pool to work by running minipools with it, which earn staking rewards for the Rocket Pool protocol (and thus, increase rETH's value). Their job is straightforward, but crucially important: run validators with the highest quality possible, and maximize staking rewards.

Node operators are responsible for:

• Setting up a computer (either physical or virtual)
• Configuring it correctly, including their home network if applicable
• Installing Rocket Pool on it and setting up minipools to perform validation
• Securing it, both from outside and inside threats
• Maintaining it for the life of their validators

It's a big responsibility, and not a simple set-it-and-forget-it kind of job; you need to care for your node for as long as it's staking. With great responsibility, however, comes great rewards.

Rewards#

Here are the major benefits of running a Rocket Pool node:

• You earn your portion of each validator's ETH rewards, plus commission.
  • For 8 ETH-bonded minipools with no staked RPL, this comes to 30% more than solo staking ((8+24*.1)/8 = 1.3)
  • Staking RPL provides boosted commission. With RPL stake valued at 10% of your total borrowed ETH or more, ETH rewards come to 42% more than solo staking ((8+24*.14)/8 = 1.42)
  • Note: if you do not participate in the smoothing pool, you will instead receive 15% more than solo staking ((8+24*.05)/8 = 1.15) -- it is highly recommended that users with minipools made on/after 2024-10-28 opt into the smoothing pool.
• You also earn issuance rewards on the RPL you stake.
  • At the end of a period (every 28 days), there's a snapshot of your RPL.
  • You can earn max yield on RPL up to 15% of the value of your total borrowed ETH.
    • You will earn yield on RPL beyond that, at a decreasing level.
  • You will get vote power based on the square root of your staked RPL.

Limitations#

There are some limitations that come along with the rewards above:

• If your node performs poorly and you actually end up losing ETH by the time you decide to exit your minipool, all of the lost ETH is coming out of your share.
  • For example: if you exit with a balance of 30 ETH, then your minipool lost 2 ETH from its initial 32 ETH deposit. You will receive 6 ETH, and 24 ETH will be returned to the staking pool.
• Your staked RPL will be less liquid

  • You can only withdraw RPL stake beyond that valued at 60% of your bonded ETH.

  • You cannot withdraw RPL if you've staked in the last 28 days

You've got this#

If you're fairly new to using the command line or computer maintenance, this can seem like a scary challenge. Luckily, one of Rocket Pool's most core principles is decentralization - the fact that anyone, anywhere, can run a node if they have the determination and knowledge. While we can't help with determination, we can help with knowledge. This section is packed with guides, walkthroughs, and information that will help you understand how to run a great Rocket Pool node.