#Staking Directly via Rocket Pool

#Overview

Rocket Pool's staking interface now offers two distinct routes for converting between ETH and rETH:

1. Protocol Route - Direct interaction with Rocket Pool smart contracts
2. CoW Swap Route - Decentralized exchange aggregator with MEV protection (Mainnet only)

The interface automatically recommends the best route based on current market conditions and liquidity availability.

#Routing Options Explained

#Protocol Route

How it works: Direct interaction with Rocket Pool's deposit pool and smart contracts on-chain.

Advantages:

• Instant execution
• Predictable exchange rate based on current rETH/ETH ratio
• No intermediary tokens required (direct ETH ↔ rETH conversion)
• Lower complexity
• Always get exactly as much rETH as your ETH is worth (minus a 0.05% deposit fee)
• No slippage, no liquidity issues, no sandwiching or front-running

Limitations:

• Subject to deposit pool limits when staking
• Subject to liquidity availability when unstaking
• Requires gas fees for transaction
• Gas fees might be expensive for small amounts

#CoW Swap Route (Mainnet Only)

How it works: Uses CoW Protocol's batch auction system to find the best price across multiple DEXs.

Advantages:

• MEV (Maximum Extractable Value) protection against sandwich attacks
• Gasless execution - you only sign the order
• Often provides better rates through DEX aggregation
• Always available regardless of protocol deposit pool limits
• No gas fees for the swap itself

Limitations:

• Requires WETH wrapping/unwrapping steps (handled automatically)
• Orders may take 2-5 minutes to execute
• Orders can expire if not matched within the time limit
• Requires one-time token approvals

#Key Concepts

#WETH (Wrapped ETH)

When using CoW Swap, the interface automatically handles WETH conversions:

• WETH is an ERC-20 token representing ETH in a standardized format
• 1 WETH always equals 1 ETH
• The interface wraps ETH to WETH before trading and unwraps after
• You only pay gas for the initial wrap (one-time)

#Slippage Tolerance

For CoW Swap orders:

• Default: 0.5%
• Adjustable based on your preference
• Higher slippage = more likely to execute
• Lower slippage = better price protection

#Order Expiry

CoW Swap orders have a time limit:

• Default: 30 minutes
• Adjustable from 5 minutes to 24 hours
• Orders automatically cancel if not executed

#Better Rate Indicator

The interface shows which route offers better value:

• Green badge with "X% better" indicates the optimal route
• Automatically pre-selects the best option
• Updates in real-time as market conditions change

#Protocol Liquidity

When unstaking rETH:

• Protocol route requires available ETH in the deposit pool
• Shows "Insufficient liquidity" when pool is empty
• Automatically routes through CoW Swap when protocol liquidity is unavailable

#Getting Started

Preparing on the Hoodi Testnet

Preparing on Ethereum Mainnet

WARNING

When practicing staking on the test network, you do not need to provide any of your real ETH during this process. You will be given fake test ETH to use instead.

Do not attempt to move your real ETH on mainnet to the testnet or you will lose it permanently!

Start by installing MetaMask if you haven't already. Follow the instructions on their site to install the extension, create an account, and sign in.

Next, open the MetaMask panel using its icon in your browser toolbar.

You will need to add the Hoodi Testnet to MetaMask.

Click on the top left dropdown & click the "Add Network" button.

You will see a list of networks, Hoodi is not in this list so click the "Add a network manually" button.

Fill in the following details:

Network Name: Hoodi
New RPC Url: https://rpc.hoodi.ethpandaops.io
Chain ID: 560048
Currency Symbol: ETH
Block Explorer Url: https://hoodi.etherscan.io

Then click Save. You should now see the Hoodi network in the top left dropdown.

Click on the network dropdown in the top left of the Metamask extension & select Hoodi Test Network.

Finally, add the rETH token to MetaMask so you can see your balance and access it for trading. Click the Assets tab, then click Add Token:

Ensure that Custom Token is selected in this dialog. In the Token Contract Address box, put the following value:

0x7322c24752f79c05ffd1e2a6fcb97020c1c264f1

The Token Symbol should automatically be populated with rETH, and the Decimals of Precision should automatically be populated with 18.

Accept the rest of the prompts, and then you will see the rETH token appear in your list.

Now that you have a wallet address in MetaMask, you need to fill it with some test ETH. Head over to the Practicing with the Test Network page for a quick guide on how to use a testnet faucet to get some test ETH on Hoodi.

Once you have some Hoodi ETH to test with, head to https://testnet.rocketpool.net/.

Note: Testnet only supports Protocol routing. CoW Swap is available on mainnet only.

#Staking ETH for rETH

Once you're at the staking site, click on the connect wallet button. Please read through and accept the Terms of Service & Privacy Policy, this will enable different ways to connect, then click connect metamask.

MetaMask will prompt you to select an account to connect to the website. Choose one, confirm a few permissions, and you'll see your balances update in the UI.

#Step 1: Enter Amount

Enter the amount of ETH you want to stake in the Stake ETH input field.

[Image placeholder: Input field with amount being entered]

#Step 2: Review Routing Options

The interface will display two routing options (mainnet only):

• Protocol Card: Shows if deposit pool is available or full
• CoW Swap Card: Shows estimated output and rate comparison

The better option will be highlighted with a green "X% better" badge and automatically selected.

[Image placeholder: Routing cards showing comparison]

#Step 3: Configure Settings (CoW Swap Only)

If using CoW Swap, you can optionally:

• Adjust slippage tolerance (default 0.5%)
• Set order expiry time (default 30 minutes)

#Step 4: Execute Transaction

#Unstaking rETH for ETH

When you're ready to unstake and trade your rETH back for ETH, head back to the staking website and click on the swap direction button to switch to unstaking mode:

#Step 1: Enter Amount

Enter the amount of rETH you want to unstake in the Unstake rETH field.

#Step 2: Check Routing Availability

The interface will show:

• Protocol liquidity available in the deposit pool
• Protocol card status (available or "Insufficient liquidity")
• CoW Swap card with estimated ETH output

#Step 3: Execute Unstaking

#Troubleshooting

#Common Issues

#Order Expired (CoW Swap)

Your order didn't execute within the time limit.

Solutions:

• Increase order expiry time (up to 24 hours)
• Adjust slippage tolerance higher
• Try again with current market prices
• Use Protocol route if available

#Insufficient Balance

Not enough ETH/rETH for the transaction.

Solutions:

• Check wallet balance
• Account for gas fees (Protocol route)
• Reduce stake/unstake amount

#Pool Full (Protocol Staking)

Deposit pool has reached its limit.

Solution:

• Use CoW Swap route (automatically selected)
• Wait for node operators to pull ETH from pool
• Check back later for availability

#Insufficient Liquidity (Protocol Unstaking)

Not enough ETH in deposit pool for unstaking.

Solution:

• Use CoW Swap route (automatically selected)
• Always available regardless of pool state

#Manual WETH Conversion

If you have WETH that wasn't automatically unwrapped:

1. Visit swap.cow.fi
2. Connect your wallet
3. Swap WETH → ETH (1:1 ratio, gasless)

Or use Etherscan:

1. Go to WETH contract: 0xC02aaA39b223FE8D0A0e5C4F27eAD9083C756Cc2
2. Connect wallet to "Write Contract"
3. Use withdraw function
4. Enter amount in Wei
5. Execute transaction

#Best Practices

#For Optimal Rates

• Let the interface auto-select the best route
• Check during low network activity for better protocol availability
• For large amounts, CoW Swap often provides better rates
• Adjust slippage carefully to balance execution likelihood vs price

#For Security

• Verify you're on the correct website: https://stake.rocketpool.net
• Start with small test amounts
• Review all transaction details before confirming
• Keep some ETH for gas fees
• Only approve trusted contracts

#For Gas Optimization

• Compare gas costs between routes
• Batch transactions when possible
• Use CoW Swap for small amounts to avoid high gas fees
• Monitor gas prices at etherscan.io/gastracker

#Tax Implications

#Understanding rETH and Taxes

When staking with Rocket Pool, it's crucial to understand potential tax implications:

#The Staking Transaction (ETH → rETH)

Potential Tax Events:

• Token Swap: Converting ETH to rETH may be considered a taxable event in many jurisdictions
• Capital Gains/Losses: If your ETH has appreciated since acquisition, you may owe capital gains tax
• Cost Basis: The value of rETH received becomes your new cost basis for future transactions

Example Scenario:

Bought 1 ETH at $1,000
Stake when ETH is worth $2,000
Potential taxable gain: $1,000
Your rETH cost basis: $2,000

#Holding rETH (Earning Rewards)

How rETH Appreciates:

• rETH increases in value relative to ETH automatically
• No new tokens are received - the token itself appreciates
• This appreciation represents your staking rewards

Tax Treatment Varies:

• Some jurisdictions: Tax on appreciation only when realized (upon sale/swap)
• Other jurisdictions: May tax unrealized gains annually
• Income vs. Capital Gains: Classification affects tax rates

#The Unstaking Transaction (rETH → ETH)

Tax Considerations:

• Converting rETH back to ETH is typically a taxable event
• Calculate gain/loss based on:
• Cost basis: Value when you acquired rETH
• Disposal value: Value when converting back to ETH
• The difference is your capital gain or loss

#Routing Method Tax Implications

#Protocol Route

• Single taxable event per transaction
• Clear timestamp and value for tax records
• On-chain transaction provides permanent record

#CoW Swap Route

• WETH wrapping/unwrapping typically not taxable (1:1 conversion)
• Main swap (ETH/WETH ↔ rETH) is the taxable event
• Order execution provides clear tax documentation

#Record Keeping Best Practices

Essential Records to Maintain:

1. For Each Stake:

• Date and time of transaction
• Amount of ETH staked
• Amount of rETH received
• ETH price at time of staking
• Transaction hash
• Gas fees paid

2. While Holding:

• Periodic snapshots of rETH/ETH exchange rate
• Your rETH balance over time
• Market values on key dates (year-end, etc.)

3. For Each Unstake:

• Date and time of transaction
• Amount of rETH unstaked
• Amount of ETH received
• ETH price at time of unstaking
• Transaction hash
• Gas fees paid

Tools for Tracking:

• Export transactions from Etherscan
• Use portfolio tracking apps that support rETH
• Maintain a spreadsheet with all transactions
• Consider using crypto tax software

#Tax Optimization Strategies

Timing Considerations:

• Tax-Loss Harvesting: Unstake during market downturns if you have losses to offset gains
• Long-term vs. Short-term: Many jurisdictions favor long-term holdings (typically >1 year)
• Year-end Planning: Consider timing of transactions around tax year boundaries

Cost Basis Methods:

• FIFO (First In, First Out): Default in many jurisdictions
• LIFO (Last In, First Out): May be available in some regions
• Specific Identification: Track specific rETH portions if allowed

#Common Tax Scenarios

#Scenario 1: Regular Staking

Action: Stake 10 ETH for 9.5 rETH
Tax Event: Disposal of ETH, acquisition of rETH
Report: Capital gain/loss on ETH disposal
Track: 9.5 rETH with new cost basis

#Scenario 2: Partial Unstaking

Action: Unstake 5 rETH for 5.3 ETH
Tax Event: Disposal of rETH, acquisition of ETH
Report: Capital gain/loss on rETH disposal
Track: Remaining rETH balance and cost basis

#Scenario 3: DeFi Integration

Action: Use rETH in DeFi protocols
Tax Event: Each protocol interaction may be taxable
Report: Track all movements and value changes
Track: Yields, swaps, and liquidity provisions

#Jurisdiction-Specific Considerations

United States:

• IRS treats crypto-to-crypto swaps as taxable
• Staking rewards may be taxable when received or when sold (evolving guidance)
• Form 8949 and Schedule D for reporting

European Union:

• Tax treatment varies by member state
• Some countries tax upon realization, others annually
• Consider local crypto tax regulations

United Kingdom:

• HMRC treats staking rewards as income or capital gains depending on circumstances
• Detailed record keeping required
• Consider "bed and breakfasting" rules

Other Jurisdictions:

• Research your local tax authority's crypto guidance
• Many countries are still developing frameworks
• Professional advice strongly recommended

#Using Tax Software

Popular Crypto Tax Tools:

• Most support rETH tracking
• Can import from Etherscan
• Calculate gains/losses automatically
• Generate tax reports for your jurisdiction

Integration Tips:

1. Import all wallet addresses
2. Verify rETH/ETH transactions are correctly classified
3. Ensure exchange rates are accurate
4. Review calculated gains/losses
5. Export reports for tax filing

#Red Flags to Avoid

Common Mistakes:

• Not tracking cost basis
• Forgetting to report staking transactions
• Ignoring small transactions
• Missing DeFi interactions
• Incorrect exchange rate data

Audit Preparation:

• Keep all transaction records
• Document your calculation methods
• Save exchange rate sources
• Maintain wallet ownership proof
• Store records for required retention period

#FAQs

Q: Which route should I choose? A: The interface automatically recommends the best route with a green "better rate" badge. Generally, use the recommended option.

Q: Why does CoW Swap sometimes offer better rates? A: CoW Swap aggregates liquidity from multiple DEXs and uses batch auctions to find optimal prices, often beating the fixed protocol rate.

Q: Is CoW Swap really gasless? A: Order creation and signing are gasless. You only pay gas for initial WETH wrapping and token approvals (one-time setup).

Q: How long do CoW Swap orders take? A: Typically 2-5 minutes, but can vary based on market conditions.

Q: What happens if my CoW Swap order expires? A: Nothing is lost. Your tokens remain in your wallet. You can place a new order with adjusted parameters.

Q: Why is the Protocol route sometimes unavailable? A: For staking: Deposit pool is full. For unstaking: Insufficient ETH liquidity. These are temporary states that change as users interact with the protocol.

Q: Are staking transactions taxable? A: In most jurisdictions, yes. Converting ETH to rETH and back are typically taxable events. Consult a tax professional for your specific situation.

Q: How do I track my rETH cost basis? A: Record the value of ETH when you stake it - this becomes your rETH cost basis. Use transaction hashes, timestamps, and prices for accurate records.

Q: Is moving between Protocol and CoW Swap routes different for taxes? A: The tax treatment is typically the same - both involve exchanging ETH for rETH. The route chosen doesn't usually affect tax obligations, though record keeping may differ slightly.

#Additional Resources

• Rocket Pool Documentation
• CoW Swap Documentation
• Rocket Pool Discord
• Etherscan Gas Tracker

#Contract Addresses

#Mainnet

• rETH Token: 0xae78736Cd615f374D3085123A210448E74Fc6393
• WETH Token: 0xC02aaA39b223FE8D0A0e5C4F27eAD9083C756Cc2
• Rocket Storage: 0x1d8f8f00cfa6758d7bE78336684788Fb0ee0Fa46
• CoW Protocol VaultRelayer: 0xC92E8bdf79f0507f65a392b0ab4667716BFE0110

#Hoodi Testnet

• rETH Token: 0x7322c24752f79c05ffd1e2a6fcb97020c1c264f1
• Check Rocket Pool Documentation for other Hoodi testnet addresses.

That's all there is to staking with Rocket Pool! We hope you find the new routing options helpful in getting the best value for your stake.

Feel free to swing by our Discord server to let us know what you thought of it and keep tabs on the project as it evolves.