rETH vs wbETH: Uncovering the Hidden Risks of Liquid Staking

Rocket Pool's rETH and Binance's wbETH are two popular liquid staking options, but they have different risk profiles.

Unlike node operators in Rocket Pool, who face total loss of their ETH bond at 16% correlated slashing, rETH holders bear the risk of a correlated slashing event. In fact, rETH stakers are more exposed to correlated slashing and attestation leaks due to the protocol's use of an insurance pool.

Binance wbETH users, on the other hand, face different risks because Binance operates the validators, creating single points of failure. The base consensus layer APR for Ethereum staking sits at approximately 2.78%, with additional 0.3 to 0.8% from MEV-Boost.

Rocket Pool's insurance pool targets a 15% correlated slashing event and aims for 6,480 ETH in backing to protect rETH holders. This pool provides more security against correlated slashing than the current system for 10% of the capital.