rETH is a representation of ETH staked through the Rocket Pool network of validators to secure the Ethereum network.
rETH is a low-cap, fully collateralized asset. This asset is exposed to the underlying risks of Rocket Pool and Optimism bridge, which are protocols both rated as Good. rETH is backed 1:1 by ETH staked on the Ethereum blockchain. The asset accrues staking rewards automatically. rETH can trade at a discount to 1 ETH as it is less liquid, has less utility (cannot be used to pay for gas fees), and has more technical risk (Rocket Pool smart contract bugs). The asset has an uncapped supply but has inflation control or burn mechanisms in place.
rETH is highly correlated to the overall market. RETH can trade at a discount to 1 ETH as it is less liquid, has less utility (cannot be used to pay for gas fees), and has more technical risk (delay to ETH merge, Rocket Pool smart contract bugs).
Rocket Pool is an ETH Proof-of-Stake protocol that allows users to stake their ETH without needing to lock assets or maintain the required infrastructure. This enables users to continue participating in DeFi activities related to lending and market making. Rocket Pool helps address some of the core problems associated with initial ETH staking around illiquidity, immovability and accessibility. See our risk assessment of Rocket Pool for more details.
Users receive rETH tokens when depositing their ETH into the Rocket Pool staking contract. The ETH is split between node operators and then sent to their respective validators. The rETH token value increases to reflect the accrued staking rewards, minus any penalties. There are no minimum deposit requirements when staking through Rocket Pool. The protocol currently charges a fixed 14% fee that is paid out solely to node operators.
ETH deposited into the Rocket Pool staking contract are subsequently locked into the Ethereum PoS deposit contract. The staked ETH is now withdrawable following the Shanghai upgrade. Users must go through an exit queue in order to withdraw their underlying ETH. In the meantime, users can always exchange their rETH for ETH through exchanges that offer liquidity like Uniswap's rETH-ETH pool.