How does Rocket Pool work?
Rocket Pool is a decentralized Ethereum-based pooling service that allows users to stake their Ether (ETH) in order to earn rewards.
It is an open source project that enables users to pool their ETH together and share the rewards of staking. The Rocket Pool network consists of two main components: a smart contract system and a network of nodes. The smart contract system is responsible for managing the pooling process, including collecting deposits, distributing rewards, and managing withdrawals.
The network of nodes is responsible for validating transactions on the Ethereum blockchain and providing consensus on the validity of transactions. When a user deposits ETH into the Rocket Pool smart contract, they are given RPL tokens in return. These tokens represent their stake in the pool and can be used to vote on decisions regarding the pool’s operations.
As more users join the pool, the rewards from staking increase as well. When it comes time to withdraw funds from Rocket Pool, users can do so by exchanging their RPL tokens back into ETH at a rate determined by market forces. This ensures that users always receive fair value for their staked ETH when they decide to withdraw from Rocket Pool.
