Thread #2: Ethereum Staking

This Thread is dedicated to participating in Ethereum’s Proof of Stake (PoS) system,by leveraging RocketPool allowing us to pool our resources and stake 8 ETH together as a Rocketpool Mini Node Operator.
By leveraging an additional smart contract, the Thread itself will have control and administration over the staked ETH and any earned rewards from Rocketpool.

Overview

In this Thread, we’ll use the Rocketpool Mini platform to stake our collective 8 ETH and earn rewards through Ethereum’s PoS system. Our Governor will be responsible for purchasing the necessary hardware and setting up a dedicated Governor Corporation to manage the staking process.

At current prices; a Rocketpool Mini is expected to earn 7.01% APR in ETH, which initially would equate to 0.5608 ETH per Year.

At todays prices, 0.56ETH would be worth $1062.85 USD per Coinbase at the time of writing.

To help cover the costs, the Governor will receive a Weavr Loan from our designated Weavr Operator, Weavr Mortgage S.A. This financial support ensures that our Thread is set up for success from day one.

Benefits

By participating in this Thread, you’ll be able to:

  1. Earn Rewards: Generate income from your ETH holdings through staking rewards.
  2. Contribute to Ethereum’s Security: Help secure the Ethereum network by participating in the PoS system.
  3. Learn and Grow: Gain valuable knowledge and experience in Ethereum staking and decentralized finance.

Responsibilities

As a participant in this Thread, you’ll be expected to:

  1. Contribute: Pool your resources with other participants to reach the funding target
  2. Stay Engaged: Stay up-to-date with the Thread’s progress and participate in discussions.
  3. Vote on Decisions: Use your voice to help make important decisions about the Thread’s operations and governance.

Governor’s Role

The Governor of this Thread will be responsible for:

  1. Purchasing Hardware: Acquire the necessary hardware for Ethereum staking.
  2. Setting Up Governor Corporation: Establish a dedicated Governor Corporation to oversee the staking process.
  3. Managing the Staking Process: Ensure the hardware is running efficiently and securely
  4. Keeping the Hardware Safe: As there is a Weavr Loan given to the Governor Corporation, there is a lien on the hardware itself. The hardware must continue to operate.
  5. Manage and maintain an expense budget: As the primary source of revenue is from ETH staking, which is controlled by the Thread - the Governor may request funds from the Thread to replenish it’s Reserve Pool.

This offer is for the sale of a Rocketpool Mini and accompanying hardware and is not related to any other products or services. The thread sub-DAO and the Governor are not responsible for any issues or disputes arising from the formation of this Thread. The contributor must comply with all applicable laws and regulations regarding staking of Ethereum via Rocketpool.

The Thread’s Governor, Weavr Mortgage S.A., and any other parties involved in the creation or operation of the Thread do not guarantee the accuracy, completeness, or suitability of the information provided. They will not be held liable for any direct or indirect losses or damages resulting from the use of, or reliance upon, the information provided in this Thread Description.

By participating in the Thread, you acknowledge and agree that you are solely responsible for your own decisions and actions, and that the success or failure of the Thread is subject to risks and uncertainties beyond the control of the Thread’s Governor, Weavr Mortgage S.A., or any other parties involved.

This Thread Description may be updated or revised at any time without notice. It is the responsibility of the participants to stay informed of any changes to the information provided.

I’d like to bring up a few discussion points that we should consider to ensure our Thread runs smoothly and successfully. I encourage everyone to share their thoughts and opinions on these topics.

  1. Thread Denomination: Currently, our Thread is denominated in USDC by default. However, we could also consider denominating it in USDC/WETH. What are your thoughts on this? Which denomination would work best for us?
  2. Auxiliary Smart Contract: To allow our Thread to manage its own Rocketpool staking efforts, we’re planning to use an unaudited auxiliary smart contract with the Token Action Proposal Type. Zeryx will be the one writing this contract. Are we comfortable with this approach, or should we explore alternative solutions?
  3. Governor Compensation: As the Governor plays a vital role in the Thread’s success, we need to discuss how they should be compensated for their efforts. Any ideas on how we can fairly reward them for their work?
  4. Weavr Loan Interest Rate: Our current plan is for the Governor to receive a Weavr Loan from Weavr Mortgage S.A. to cover hardware costs. Considering that the hardware won’t increase in value, should we propose a 0% interest rate for this loan? What are your thoughts?
  5. Thread as Administrator of Staked ETH: Lastly, we need to decide if the Thread itself should be the administrator of the staked ETH. What are the pros and cons of this approach, and is there a better alternative?

I’m eager to hear your thoughts on these points. Your input is invaluable as we work together to make Thread #2 a success. Let’s get the conversation started! :left_speech_bubble:

Cheers! :tada:

cc @cozeno @arcology @rotorless @gruad1

1 Like

Great Initiative!

regarding thread denomination, I am of the opinion that it should be USDC denominated. Future threads involving real estate would invariably need to be USDC denominated, and we need to battle-test provisions that will handle the underlying asset appreciating/depreciating well away from the initial USDC cost.

Auditing the governing smart contract for this thread is unfeasible right now, though management of staked eth via multisig is not novel and we should stick to existing contracts (if not forking outright) as much as possible. Zeryx would be the obvious candidate for undertaking this effort.

I was a believer in 0% interest rate mortgage instrument with no amortization schedule in the first place, so I think its a no brainer to structure the said loan as a 0% mortgage with hardware as collateral.

regarding the adminstrators of the staked ETH, I think it is reasonable to have the largest investors in the thread to be part of a multisig that controls the staked ETH. They would act in capacity of thread member while administering these funds, independent of what other roles they may have at weavr. I think this is the maximal interest alignment option.

finally with regards to governor compensation, I’ve estimated the yearly yields of a rocket pool mini to barely cover the deprecation of the hardware and the costs of running the hardware. Of course these costs dont scale linearly and we would have a much bigger margin if we were running a full validator. But given the situation, I dont know how to avoid a situation where the asset becomes a net negative yield asset after deprecation of hardware is taken into account. THerefore Im not sure how to allocate governor compensation out of the expected cash flow.

More input from others on the compensation part would be necessary.

1 Like

On interest, we should at least include a small interest rate just to deal with those headaches. 1% APR would be fine. We could even do 0.1% if people feel like that is too much but if this is a test product we need to test as many aspects of the system as possible within reason.

On Governor fee, I think a fixed fee sufficient to cover the minor electricity costs. I am assuming the internet connection is already in place and there is not marginal impact (after the first sync). Anything above that amount of electricity is small compensation for their trouble. The bond that the Governor is placing (presumably) should also be paying some amount of interest to compensate for idle money and platform risk. The bond should be a sufficient amount to cover losses should the Govenor unplug the HW and disappear.

On stETH administration how would that occur exactly? What are the decisions to be made? Distribute vs reinvest? when to unstake? What else?

  1. USDC makes sense, happy with this.
  2. Smart Contracts - I’ll need to explore a little here, obviously multisig based SCs like gnosis work; but kind of pull control away from the thread DAO itself.

Regarding administration; I worry that selecting members from the Thread will in effect remove any power smaller holders might have over administration. there is no enforcement mechanism within the system to ensure that a multisig used to hold some portion of the value of a Thread is handled correctly. This is why I’m suggesting we find a way to make the ThreadDAO itself directly administrate the staking.

Regarding the Governor Fee, I see bond being thrown around - I assumed we would want to scale this up to actually have a Weavr Loan instead? The numbers are small enough that a Bond could make sense; I would argue we should be trying to get loan enforcement working ASAP.

1 Like