Lido vs. Rocket Pool — Which ETH Staking Solution Is Best?

Liquid staking protocols are among the most popular options for users who want to stake their ETH, but don’t have the 32 ETH required to launch their own validator. These protocols allow users to deposit their ETH and receive tokens representing the staked ETH. For example, Lido uses the stETH token, while Rocket Pool uses the rETH token.

In this article, we’ll be comparing Lido vs. Rocket Pool to help you decide which of the two popular liquid staking solutions is the best for you. The summary is that if you highly value decentralization, you should choose Rocket Pool. Meanwhile, if you want to maximize returns, Lido is likely the better option.

Before we take a closer look at how the two protocols compare against each other, let’s go through a quick overview of each of the two staking solutions.

Lido

Lido is currently by far the most popular liquid staking protocol for Ethereum. It gives ETH holders a straightforward method of staking their coins and earning yield.

When you stake ETH through Lido, you will receive an equivalent amount of stETH tokens. stETH is rebased daily to reflect the staking rewards that are being accrued.

You can utilize stETH just like any other ERC-20 token. For example, you can lend it out through a DeFi protocol or trade it on Uniswap. However, you can also redeem your stETH through the Lido protocol to receive an equivalent amount of ETH.

The Lido protocol is governed by the Lido DAO, which consists of LDO token holders. Notably, Lido doesn’t just offer liquid staking solutions for Ethereum, but also supports the Polygon, Solana, Polkadot and Kusama blockchain platforms.

Rocket Pool

Rocket Pool is an Ethereum-based liquid staking protocol that’s focused on decentralization and trustlessness. Rocket Pool’s staking system utilizes a token called rETH to represent ETH staked by users. Similarly to stETH, rETH can be used freely on the Ethereum network or redeemed for ETH.

However, unlike stETH, rETH is not a rebasing token. Instead, Rocket Pool’s conversion rate between rETH and ETH is gradually increasing in the favor of rETH. This is why the price of rETH is higher than the price of ETH. This exchange rate is updated on a daily basis, reflecting the rewards earned by Rocket Pool’s node operators.

Depending on your jurisdiction’s tax laws, this mechanism could be more favorable than stETH’s rebasing mechanism from a tax perspective. However, please consult with a tax professional if you have any tax-related questions about your crypto holdings.

The Rocket Pool protocol implements another token called RPL, which is used in Rocket Pool governance. RPL is also required as collateral for Rocket Pool validators, which gives the protocol a way of addressing validators that are performing poorly.

Lido vs. Rocket Pool — The key differences

One of the key differences between Lido and Rocket Pool is that Lido has a permissioned set of validators, while Rocket Pool is permissionless in this regard. This means that anyone can join Rocket Pool as a validator, while only pre-approved validators are allowed on Lido.

If you have 16 ETH and 1.6 ETH worth of RPL tokens, you can join Rocket Pool as a validator. Meanwhile, it’s highly unlikely that you’ll be approved as a validator on Lido unless you’re running a professional-grade staking operation.

Lido is currently the most dominant force in Ethereum staking, as the protocol accounts for about 28.1% of all staked ETH at the time of writing. The fact that a single protocol represents such a large share of staked ETH raises some concerns about centralization, which is why users are sometimes encouraged by Ethereum community members to consider staking solutions with a smaller market share.

There’s currently only 30 different entities operating Ethereum validators for Lido. If you want to make a deep dive into the state of Lido’s decentralization, you can find a detailed overview of Lido’s Ethereum validator and node metrics for Q3 2024 here.

Meanwhile, Rocket Pool has a considerably smaller market share. According to data from Dune Analytics, there are currently 653,274 ETH staked through Rocket Pool, which corresponds to about 1.9% of all staked ETH.

Market share breakdown of Ethereum stakers. Image source: @hildobby via Dune Analytics

Despite this, Rocket Pool’s set of validators is much more diverse, as it has over 3,800 node operators.

According to a comparison of pooled staking solutions published by Ethereum.org, Rocket Pool appears to be the preferred solution for those who are looking to stake Ethereum through staking pools. It satisfies all the key criteria selected by Ethereum.org, while Lido is ranked slightly lower due to not being fully trustless and not featuring permissionless nodes.

For users that are looking to simply deposit their ETH without launching their own validator, Rocket Pool is providing an estimated 4.03% APR based on the 7-day average. Meanwhile, Lido is providing an estimated 4.9% APR (also based on the 7-day average). Please note that this information was sourced at the time of writing this article, and the estimated APRs change constantly.

Lido vs. Rocket Pool — Comparison chart

Now, let’s quickly check how Lido and Rocket Pool stack up against each other with a comparison chart.

Data as of December 11, 2024.

Rocket Pool vs. Lido — Which one should you choose?

Overall, we can conclude that Rocket Pool is the better option for users who highly value the decentralization of the Ethereum network and wish to strengthen it. Meanwhile, users who prioritize profitability and liquidity should choose Lido, as Lido is currently offering a better APR and the stETH token has stronger liquidity than rETH.

If you also wish to explore other ways of staking ETH and earning rewards, check out our overview of the different Ethereum staking options that are available to ETH holders.

Ethereum restaking – An additional way to earn rewards

If you want to explore additional ways to earn rewards using your ETH or liquid staking tokens, consider Ethereum restaking.

Ethereum restaking, enabled by protocols such as EigenLayer, is a new method to expand the utility of staked Ethereum (ETH). This approach allows staked ETH to provide cryptoeconomic security for additional protocols built on Ethereum, improving both capital efficiency and network security.

This mechanism not only increases capital efficiency for stakers but also strengthens the security of new protocols by leveraging the security established trust network, eliminating the need for these protocols to develop their own validator infrastructure.

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