RPL Liquidations Surge as Rocket Pool’s Governance Token Skyrockets Ahead of Houston Upgrade

A number of wallet addresses borrowing RPL were liquidated on Friday as the governance token for decentralized liquid staking provider Rocket Pool skyrocketed

Several wallet addresses borrowing RPL were liquidated on Friday as the governance token for decentralized liquid staking provider Rocket Pool saw a huge price swing in light of various tokenomics proposals and ahead of Sunday’s Houston upgrade.

Data from TradingView shows that the price of RPL opened the day around $19 and almost doubled to $35.78 before dropping to hover near $24.

According to a Rocket Pool community advocate, who goes by @Jasperthefriendlyghost.ETH, a wallet address swapped 199.11 WETH for 20,862 RPL, worth over $700,500.

“This large buy triggered liquidations to start happening,” Jasper told Unchained over X, adding that the large purchase pushed the price up, making the collateral insufficient to cover the increased value of the borrowed RPL.

On Friday, there were 149 liquidations in total on Aave v3’s Ethereum markets — the second highest in a day over the past year, according to a Dune Analytics dashboard created by data analyst Roman Zinovyev. A large chunk of the liquidations came from wallet addresses that borrowed RPL tokens with collateral in the form of WBTC, WETH, wstETH, USDC, rETH.

Of the total amount of collateral liquidated, which stood at $4.8 million at the time of writing, $1.5 million worth of Rocketpool’s liquid staking token, rETH, was liquidated — the most among all the various types of collateral liquidated. (Dune Analytics/Roman Zinovyev)

Houston Upgrade Expected Sunday

The liquidations come as community members are currently focused on educating the wider ecosystem about the upcoming Houston upgrade, expected to go live on Sunday, as well as various tokenomics proposals in the works.

As stated in the liquid staking provider’s documents, the Houston upgrade aims to introduce “a fully onchain DAO to govern the [Rocket Pool] protocol.”

“You can never predict what the market will do but it was reasonable to expect the market to positively price in the upgrade, especially after a number of delays,” Jasper said.

However, Charlie Mercado, a data scientist at blockchain analytics firm Flipside Crypto, had a dissenting view.

“People think the Houston upgrade is a big deal, but I’m not sure it actually is…It's cool, but it's probably not the primary driver of RPL volatility,” Mercado said.

According to Jasper, the price movement “could have been a partner buying RPL for Houston [and] it could have also been a short hunter who wanted to trigger liquidations.”

RPL Token to Get a Revamp?

Also underway are a number of tokenomic proposals, which Jasper says, “should help RPL find a more sustainable long-term valuation.”

The tokenomics proposals, first created in March and currently still in their draft stage, aim to revamp the RPL token, which has declined over 40% in the past year, according to CoinGecko.

Elements of this makeover include reducing emissions, making it possible to run a Rocket Pool node without RPL, and potentially establishing a smart contract that “holds ETH from protocol revenue and allows for RPL to be burned in exchange for that protocol ETH.”

Data from DefiLlama shows that Rocket Pool has a total locked value of nearly $4.2 billion, making it the ninth-largest DeFi protocol, ahead of restaking protocol Renzo and synthetic dollar provider Ethena.