Lido and Rocket Pool Engage in Heated Debate on Decentralization

A team member accuses Rocket Pool of centralization

In a recent social media post on July 4, a team member from Lido accused their competitor, Rocket Pool, of being too centralized. Both Lido and Rocket Pool are liquid staking protocols that offer users the ability to delegate their cryptocurrency to validators and receive derivative tokens in return.

According to Dmitry Gusakov, Lido’s community staking lead, in the Rocket Pool contracts, the control lies with the Rocket Pool team, enabling them to modify parameters and invoke any method. This means that Rocket Pool developers have the ability to increase the inflation rate to any value or raise fees up to 100%.

Gusakov claims that Lido’s contracts do not have this vulnerability since all such actions are “fully controlled by the decentralized autonomous organization, LidoDAO.”

Response from Rocket Pool

Waq, a management committee member of Rocket Pool, responded to the accusations by stating that the team is already aware of the vulnerability and has plans to address it in the future. Waq accused the Lido team of attempting to take credit for discovering an issue that was already known.

According to Gusakov’s post, the RocketStorage contract at Ethereum address 0x1d8f8f00cfa6758d7bE78336684788Fb0ee0Fa46 contains a parameter called “guardian.” Many functions within the Rocket Pool contracts are labeled as “onlyGuardian,” which means they can only be called by the account specified in this parameter. Currently, the RocketPool deployer account at 0x0cCF14983364A7735d369879603930Afe10df21e is set as the guardian.

Gusakov stated that actions that can be performed by the “guardian” include changing the “RPL InflationIntervalRate” and the “ETH DepositFee.” This implies that the team can increase the inflation rate of the Rocket Pool governance token (RPL) or remove users’ deposits by setting the fee to 100%.

Reactions from the community

Chris Blec, a content creator, shared Gusakov’s post, asserting that it proves that “pDAO is not a DAO” or that RPL token holders do not have real control over Rocket Pool’s governance.

Jasper.lens, a Rocket Pool community advocate, responded by acknowledging the centralization issue and mentioning that it will be addressed in the upcoming Saturn upgrade. Jasper explained that the centralization occurred during a phase when voting systems for Rocket Pool’s DAO were being designed and tested. Initially, on-chain voting was not allowed during the testing phase. However, testing has now been completed, and the upcoming Saturn upgrade aims to resolve these decentralization concerns.

Waq, in agreement with Jasper.lens, commented that the Rocket Pool community has been diligently working for over a year to fix this problem and predicted that the Lido team would rush to take credit once the issue is resolved, as they have allegedly done in the past.

Growing popularity of liquid staking protocols

Liquid staking protocols have experienced a surge in popularity over the past few months. On May 1, blockchain analytics platform DefiLlama reported that these protocols had surpassed decentralized exchanges as the leading category in terms of total value locked in decentralized finance. On May 30, Tenet announced a partnership with LayerZero to implement liquid staking on more blockchains in the future.