Author: @jasper-rocketpool, @dybsy
Summary:
This is a proposal for HOP protocol to offer fast bridging support for rETH to/from Optimism, Arbitrum, and Ethereum L1.
The Rocket Pool Incentive Committee will be offering $RPL incentives to rETH/hrETH AMM LPs on Optimism and Arbitrum to facilitate the process. We propose a starting plan of 50 $RPL / 28 day period in incentives per L2 with the intent to scale the amount as we support additional chains based on volume building across ecosystems.
One binding piece of the proposal would be if Hop Protocol were to consider matching Rocket Pool with $HOP co-incentives. We suggest 12k $HOP per 28 day period per L2. The Rocket Pool treasury is very small relative to most DAOs and partnerships are how we are able to compete. These incentives will go towards the $rETH Bonder, run by a prominent member of the Rocket Pool community.
Rationale:
The Rocket Pool protocol produces the $rETH liquid staking token, third-largest by MCAP. The network is composed of over 2,000 node operators spread all throughout the world. This wide blanket of security means the $rETH token is incredibly decentralized and robust. The protocol is entirely permissionless to run validators on and is very aligned with the ethos of Ethereum broadly. The protocol has undergone auditing with all the top firms - Consensys Diligence, Sigma Prime, Trail of Bits, and also has a $250k Immunefi bug bounty. The token follows a cToken model, meaning the rewards passively accrue as the rETH/ETH ratio climbs. This is ideal for layer 2 adoption as the token is very simple relative to rebasing tokens.
The rETH token is already available on Optimism, Arbitrum, Polygon, ZkSync, and Ethereum mainnet. There is an ongoing liquidity program on Optimism that has driven 3.4k rETH to that network. A further 1.5k rETH exists naturally on Arbitrum. These networks all have rETH on them, however, it is a large challenge for the market to keep the token value balanced across all said networks. The native 1-week timelock makes this arbitrage difficult. We anticipate this arbitrage flow to expand as new liquidity programs begin on different chains.
Fast bridging support for rETH on Hop would be a major UX improvement for Rocket Pool users and it would also drive volume + usage for Hop Protocol. There is no other bridge that supports rETH. This would make Hop a major destination for all liquid staking token arbitrage. As the Atlas upgrade rolls out, the $rETH supply is expected to undergo massive growth from collateral reduction from 16 → 8 ETH and solo staker migration.
Further, as far as our research has shown (Celer, Synapse, HOP), if HOP onboarded rETH, it would be the first cross-chain bridge for any liquid staking token, potentially ushering in a brand new market that is only bound to grow. Early movers often end up taking a lion’s share of volume, and so it is in HOP’s best interest to move fast to entrench the advantage.
Considering the above, we think it would make sense for Hop protocol to co-incentivize hToken liquidity with Rocket Pool on Optimism and Arbitrum.
Specification:
** Seed bonders on L1 with rETH from the Rocket Pool Community
** Incentivize liquidity for hrETH/rETH with 50 $RPL per 28 day cycle per L2
** Incentivize bonder liquidity with 12k $HOP per 28 day cycle per L2
** Roll out bridging support for rETH on Hop
Notes:
*After discussion with the HOP team, the amount of $RPL that we suggest be matched by $HOP is approximately $25,000/year/chain equivalent at time of writing.
