This is an inside look into the financals of my Ethereum/Rocketpool validator node, which I am operating and accounting for as if it were a small business. Hopefully this can give an idea of the real costs & rewards of the business opportunity (I know I wished I had something like this before starting!)

Because the validator yield is so low compared to Ether’s volatility, in my opinion it only makes sense to use Ether as the unit of account (ie I need to be long ether long term already before running the validator makes sense). For this reason, all costs and revenues below are listed in ether terms without conversion to dollars.

Note on electrical cost: because this validator’s electrical usage is relatively low (30w) and is mixed with my personal home bills, I will only settle the cost from the business very occassionally (this is why you’ll see a payable liability below).

Contents

• Historical Company Book Value
• Launch & Initial Investments
• Income Statements
  • Augest 2023
  • July 2023
  • June 2023
  • May 2023
  • April 2023
  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022

Launch

Upfront investment & costs:

• Validator Stake: Ξ16
• Hardware: Ξ0.6
• RPL Collateral: Ξ1.61 (108.21 RPL)
• Setup Gas: Ξ0.0224
• Cash Float: Ξ0.467217
• Total Upfront Investment: Ξ18.699617

Augest 2023

Activity of interest:

• Attestation performance: 6297/6300 (99.95%)

Income Statement

Net Profit: Ξ0.09784

Balance Sheet

To-date ROI: 3.1%

I am neutral to bearish on the price of RPL. This suplimentary accounting scheme applies a heavy 50% risk-based discount to RPL assets. I expect this adjusted ROI to be negative for the better part of a year.

• Discounted RPL Stake: Ξ1.46320 * 50% = Ξ0.73160
• Discounted Unclaimed RPL yield: Ξ0.01852 * 50% = Ξ0.00926
• Adjusted Net Equity: Ξ18.55527
• Adjusted ROI: -0.7%

July 2023

Activity of interest:

• Attestation performance: 6293/6300 (99.88%)

Income Statement

Net Profit: Ξ0.08811

Balance Sheet

To-date ROI: 3.8%

I am neutral to bearish on the price of RPL. This suplimentary accounting scheme applies a heavy 50% risk-based discount to RPL assets. I expect this adjusted ROI to be negative for the better part of a year.

• Discounted RPL Stake: Ξ1.70775 * 50% = Ξ0.85387
• Discounted Unclaimed RPL yield: Ξ0.01097 * 50% = Ξ0.00548
• Adjusted Net Equity: Ξ18.55597
• Adjusted ROI: -0.7%

June 2023

Activity of interest:

• Attestation performance: 6288/6300 (99.8%)
• Rewards were claimed to cold storage this month
• Hardware was deprecated another $100 this month

Income Statement

Net Profit: Ξ0.10873

Balance Sheet

To-date ROI: 5.6%

I am neutral to bearish on the price of RPL. This suplimentary accounting scheme applies a heavy 50% risk-based discount to RPL assets. I expect this adjusted ROI to be negative for the better part of a year.

• Discounted RPL Stake: Ξ2.15236 * 50% = Ξ1.07618
• Discounted Unclaimed RPL yield: Ξ0 * 50% = Ξ0
• Adjusted Net Equity: Ξ18.68458
• Adjusted ROI: -0.08%

May 2023

Activity of interest:

• Minipool contract delegate was upgraded to allow rewards distributions
• Attestation performance: 6266/6300 (99.4%)
• Blocks proposed: 1

Income Statement

Net Profit: Ξ0.12216

Balance Sheet

To-date ROI: 8.9%

I am neutral to bearish on the price of RPL. This suplimentary accounting scheme applies a heavy 50% risk-based discount to RPL assets. I expect this adjusted ROI to be negative for the better part of a year.

• Discounted RPL Stake: Ξ2.81352 * 50% = Ξ1.40676
• Discounted Unclaimed RPL yield: Ξ0.05748 * 50% = Ξ0.02874
• Adjusted Net Equity: Ξ18.93137
• Adjusted ROI: 1.2%

April 2023

Activity of interest:

• Due to major storm, validator was offline for several days, drastically lowering performance.
• Attestation performance: 5744/6300 (91.1%)
• Blocks proposed: 0
• Withdrawals fork was activated, so “locked beacon rewards” has become “minipool contract balance”

Income Statement

Net Profit: Ξ0.05919

Balance Sheet

To-date ROI: 7.4%

I am neutral to bearish on the price of RPL. This suplimentary accounting scheme applies a heavy 50% risk-based discount to RPL assets. I expect this adjusted ROI to be negative for the better part of a year.

• Discounted RPL Stake: Ξ2.66197 * 50% = Ξ1.33099
• Discounted Unclaimed RPL yield: Ξ0.03536 * 50% = Ξ0.01768
• Adjusted Net Equity: Ξ18.73467
• Adjusted ROI: 0.18%

March 2023

Activity of interest:

• Attestation performance: 6295/6300 (99.92%)
• Blocks proposed: 0
• Hardware was discounted by another $60

Income Statement

Net Profit: Ξ0.08895

Balance Sheet

To-date ROI: 6.9%

I am neutral to bearish on the price of RPL. This suplimentary accounting scheme applies a heavy 50% risk-based discount to RPL assets. I expect this adjusted ROI to be negative for the better part of a year.

• Discounted RPL Stake: Ξ2.633 * 50% = Ξ1.3165
• Discounted Unclaimed RPL yield: Ξ0.01775 * 50% = Ξ0.008875
• Adjusted Net Equity: Ξ18.6776
• Adjusted ROI: -0.1%

February 2023

Activity of interest:

• Attestation performance: 6296/6300 (99.93%)
• Blocks proposed: 0
• RPL & smoothing pool rewards were claimed this month, clearing out the gas liability
• All unlocked RPL was sold for ether at market rate

Revenue

• Smoothing pool (MEV & tips): Ξ0.024157
• RPL yield: Ξ0.024877 (0.872891 RPL)
• Beacon chain (including commission): Ξ0.0648
• Total: Ξ0.113834

Expenses

• Electric: Ξ0.0009 (recording as liability)
• Claim Rewards: Ξ0.004686 - Ξ0.00259 = Ξ0.002096 (drawing down on gas liability)
• Sell RPL for ETH on 1inch: Ξ0.005857
• Total: Ξ0.008853

Net Profit: Ξ0.104981

Balance Sheet

Assets:

• Validator: Ξ16
• Locked Beacon Rewards: Ξ0.3130
• Locked RPL Stake: Ξ3.0838425 (108.205 RPL)
• Unclaimed RPL yield: Ξ0 (0 RPL)
• Unclaimed Smoothing Pool: Ξ0
• Discounted Hardware value: Ξ0.3827 ($860)
• Cash on hand (Hot): Ξ0.269632
• Cash on hand (Cold): Ξ0.3819
• Sub-total: Ξ20.431074

Liabilities:

• Gas Obligation (to claim rewards): Ξ0
• Electric Payable: Ξ0.0045

Net Shareholder Equity: Ξ20.426574

To-date ROI: 9.23%

I am neutral to bearish on the price of RPL. This suplimentary accounting scheme applies a heavy 50% risk-based discount to RPL assets. I expect this adjusted ROI to be negative for the better part of a year.

• Discounted RPL Stake: Ξ3.0838425 * 50% = Ξ1.5419212
• Discounted Unclaimed RPL yield: Ξ0 * 50% = Ξ0
• Adjusted Net Equity: Ξ18.88465
• Adjusted ROI: 0.98%

January 2023

Activity of interest:

• Attestation performance: 6287/6300 (99.79%)
• Blocks proposed: 1 🎉

Revenue

• Smoothing pool (MEV & tips): Ξ0.0844
• RPL yield: Ξ0.01924 (0.805168 RPL)
• Beacon chain (including commission): Ξ0.074
• Total: Ξ0.17764

Expenses

• Gas Obligation: Ξ0.00259 (recording as liability)
• Electric: Ξ0.0009 (recording as liability)
• Total: Ξ0.00349

Net Profit: Ξ0.17415

Balance Sheet

Assets:

• Validator: Ξ16
• Locked Beacon Rewards: Ξ0.2482
• Locked RPL Stake: Ξ2.5861 (108.205 RPL)
• Unclaimed RPL yield: Ξ0.01924 (0.805168 RPL)
• Unclaimed Smoothing Pool: Ξ0.0844
• Discounted Hardware value: Ξ0.407 ($860)
• Cash on hand (Hot): Ξ0.278133
• Cash on hand (Cold): Ξ0.29199
• Sub-total: Ξ19.915063

Liabilities:

• Gas Obligation (to claim rewards): Ξ0.00259
• Electric Payable: Ξ0.0036

Net Shareholder Equity: Ξ19.908873

To-date ROI: 6.5%

Risk Adjusted Accounting

I am neutral to bearish on the price of RPL. This suplimentary accounting scheme applies a heavy 50% risk-based discount to RPL assets. I expect this adjusted ROI to be negative for the better part of a year.

• Discounted RPL Stake: Ξ2.5861 * 50% = Ξ1.29305
• Discounted Unclaimed RPL yield: Ξ0.01924 * 50% = Ξ0.00962
• Adjusted Net Equity: Ξ18.606203
• Adjusted ROI: -0.4%

December 2022

Activity of interest:

• Attestation performance: 6296/6300 (99.93%)
• Blocks proposed: 1 🎉
• RPL & smoothing pool rewards were claimed this month, clearing out the gas liability
• All unlocked RPL was sold for ether at market rate

Revenue

• Smoothing pool (MEV & tips): Ξ0.0175
• RPL yield: Ξ0.01157 (0.703212 RPL)
• Beacon chain (including commission): Ξ0.0694
• Total: Ξ0.09847

Expenses

• Claim RP rewards: Ξ0.003814 - Ξ0.00259 = Ξ0.001224 (drawing down from gas liability)
• Approve RPL for sale on 1inch (gas): Ξ0.0009272
• Sell RPL for Ether on 1inch (gas): Ξ0.002202
• Electric: Ξ0.009 (recording as liability)
• Total: Ξ0.013353

Net Profit: Ξ0.085117

Balance Sheet

Assets:

• Validator: Ξ16
• Locked Beacon Rewards: Ξ0.1742
• Locked RPL Stake: Ξ1.7814 (108.205 RPL)
• Unclaimed RPL yield: Ξ0 (0 RPL)
• Unclaimed Smoothing Pool: Ξ0
• Discounted Hardware value: Ξ0.5291 ($860)
• Cash on hand (Hot): Ξ0.278133
• Cash on hand (Cold): Ξ0.29199
• Sub-total: Ξ19.054823

Liabilities:

• Gas Obligation (to claim rewards): Ξ0
• Electric Payable: Ξ0.0027

Net Shareholder Equity: Ξ19.052123

To-date ROI: 1.88%

Risk Adjusted Accounting

I am neutral to bearish on the price of RPL. This suplimentary accounting scheme applies a heavy 50% risk-based discount to RPL assets. I expect this adjusted ROI to be negative for the better part of a year.

• Discounted RPL Stake: Ξ1.7814 * 50% = Ξ0.8907
• Discounted Unclaimed RPL yield: Ξ0 * 50% = Ξ0
• Adjusted Net Equity: Ξ18.161423
• Adjusted ROI: -2.8%

November 2022

Activity of interest:

• Attestation performance: 6225/6300 (98.8%)
  • Performance was low this month due to Besu becoming very unstable; I’ve swapped it out for Geth to prevent further downtime.
• Blocks proposed: none
• RPL collateral briefly dropped below 10% at the checkpoint, meaning there are no RPL rewards this period (why not top-up?)

Revenue

• Smoothing pool (MEV & tips): Ξ0.0402
• Beacon chain (including commission): Ξ0.06865
• Total: Ξ0.10885

Expenses

• Electric: Ξ0.009 (recording as liability)

Net Profit: Ξ0.09985

Balance Sheet

Assets:

• Validator: Ξ16
• Locked Beacon Rewards: Ξ0.1048
• Locked RPL Stake: Ξ1.623 (108.205 RPL)
• Unclaimed RPL yield: Ξ0.009858 (0.657254 RPL)
• Unclaimed Smoothing Pool: Ξ0.0669
• Discounted Hardware value: Ξ0.5 ($860)
• Cash on hand (Hot): Ξ0.278133
• Cash on hand (Cold): Ξ0.189084
• Sub-total: Ξ18.771775

Liabilities:

• Gas Obligation (to claim rewards): Ξ0.00259
• Electric Payable: Ξ0.0018

Net Shareholder Equity: Ξ18.767385

To-date ROI: 0.36%

Risk Adjusted Accounting

I am neutral to bearish on the price of RPL. This suplimentary accounting scheme applies a heavy 50% risk-based discount to RPL assets. I expect this adjusted ROI to be negative for the better part of a year.

• Discounted RPL Stake: Ξ1.623 * 50% = Ξ0.8115
• Discounted Unclaimed RPL yield: Ξ0.009858 * 50% = Ξ0.004929
• Adjusted Net Equity: Ξ17.950956
• Adjusted ROI: -4.0%

October 2022

Activity of interest:

• Attestation performance: 5271/5276 (99.9%)
• Blocks proposed: none
• The validator was started part way through this month, so revenues will be lower than following months

Revenue

• RPL yield: Ξ0.00978 (0.657254 RPL)
• Smoothing pool (MEV & tips): Ξ0.0267
• Beacon chain (including commission): Ξ0.03615
• Total: Ξ0.07263

Expenses

• Gas Obligation: Ξ0.00259 (recording as liability)
• Electric: Ξ0.009 (recording as liability)
• Total: Ξ0.01159

Net Profit: Ξ0.06104

Balance Sheet

Assets:

• Validator: Ξ16
• Locked Beacon Rewards: Ξ0.03615
• Locked RPL Stake: Ξ1.622 (108.205 RPL)
• Unclaimed RPL yield: Ξ0.00978 (0.657254 RPL)
• Unclaimed Smoothing Pool: Ξ0.0267
• Discounted Hardware value: Ξ0.47 ($860)
• Cash on hand (Hot): Ξ0.278133
• Cash on hand (Cold): Ξ0.189084
• Sub-total: Ξ18.631847

Liabilities:

• Gas Obligation (to claim rewards): Ξ0.00259
• Electric Payable: Ξ0.0009

Net Shareholder Equity: Ξ18.628357

To-date ROI: -0.38% (negative due to heavily discounting the hardware value upfront)

Risk Adjusted Accounting

I am neutral to bearish on the price of RPL. This suplimentary accounting scheme applies a heavy 50% risk-based discount to RPL assets. I expect this adjusted ROI to be negative for the better part of a year.

• Discounted RPL Stake: Ξ1.622 * 50% = Ξ0.811
• Discounted Unclaimed RPL yield: Ξ0.00978 * 50% = Ξ0.00489
• Adjusted Net Equity: Ξ17.812467
• Adjusted ROI: -4.7%

Historical Company Book Value

This chart captures the net shareholder equity at the end of each month in both Ether (the primary unit of account), and Canadian dollars.