Swell: A More Efficient Non-Custodial Liquid Restaking Protocol

Abstract

Swell is a non-custodial liquid staking and restaking protocol that allows Ethereum users to earn staking rewards while maintaining the liquidity of their assets.

Swell L2 is developed on the OP Stack as a Restaked Rollup with the help of technologies such as AltLayer and Radius.

The native token of the Swell Network is SWELL, with a supply of 10 billion tokens.

What Is Swell?

Swell is a non-custodial liquid restaking protocol that allows Ethereum users to earn staking rewards while maintaining the liquidity of their assets. When users stake or restake ETH via Swell, they receive a liquidity token that generates income (LST or LRT). Users can choose to hold this token or participate in the broader DeFi ecosystem to earn additional rewards. Swell aims to lower users' barriers to accessing DeFi, deliver the best liquid staking and restaking experience, drive the development of Ethereum and restaking services, and secure a safer, more decentralized, and transparent financial future for the world.

Technical Principles Behind Swell

On a technical level, Swell's core technology is Swell L2. It utilizes the AltLayer technology stack as a "restaked Rollup" for deployment and OP Stack for building. Most importantly, it also includes "native rewards" on the chain, which are driven by staking and restaking incentives in a unique mechanism called “proof of restake”.

Swell offers a premium restaking experience by combining smart contracts with professional node operators. When users deposit ETH, they receive swETH (a Liquid Staking Token) or rswETH (a liquid restaking token) in return. The deposited ETH is collected by permissioned node operators and staked on the Ethereum network. In this process, they can convert their tokens back to the original ETH at any time and accumulate rewards.

Overall, Swell L2 is expected to significantly reduce transaction costs, improve throughput, and enable Swell to serve a broader group of users. It should be noted that the rewards for rswETH do not come out of thin air. The restaking project collects Ethereum's staking certificates and creates a security leasing pool. In this process, the project can rent Ethereum's security to avoid building its own AVS, while LST stakers benefit from a stable APY.

Swell's Ecosystem Products and Advantages

Swell's key ecosystem products include swETH Liquid Staking, rswETH Liquid Restaking, swBTC Liquid Restaking Vault, SWELL DAO, and Swell L2. As of now, Swell's TVL has exceeded $1.8 billion, with over 220,000 users.

swETH Liquid Staking: swETH Liquid Staking allows users to convert ETH into swETH and earn staking rewards in DeFi protocols.

rswETH Liquid ReStaking: rswETH is Swell's Liquid Restaking Token (LRT). By holding rswETH, users can unlock additional rewards through integration with EigenLayer.

swBTC Liquid Restaking Vault: The swBTC vault allows Bitcoin holders to indirectly earn staking rewards on Ethereum.

SWELL DAO: SWELL DAO is the decentralized governance mechanism of the Swell Network. SWELL and rSWELL holders can actively participate in key decision-making processes, including protocol upgrades, fee structures, and strategic partnerships.

On the whole, Swell's products have various advantages:

1) Simple and User-friendly Page: Swell is easy to use, allowing users to earn staking rewards and access DeFi opportunities through a single page. Users' swETH or rswETH earned from staking can be utilized in the broader DeFi ecosystem.

2) Low Service Costs: Swell's staking providers charge only a 10% staking fee, making it one of the lowest-cost staking options on the market. Since Swell does not have minimum staking requirements for users, users can earn staking rewards with only a small amount of ETH.

3) Mitigating Centralization Risks: Over-concentration with a single staking provider can undermine Ethereum's core values of decentralization and censorship resistance. Swell supports a dynamic liquid staking market to preserve Ethereum's diversity and decentralization.

4) Guaranteed Security: Swell's self-custodial staking enables users to hold their assets in their own wallets while still earning staking rewards. Meanwhile, their control remains unaffected. In addition, Swell is continuously audited by top-tier blockchain security companies. It also partners with skilled, experienced professional node operators for management so as to ensure asset security.

5) Strong Technical Strength: Instead of simply copying existing protocols, Swell was built from the ground up to deliver an exceptional staking experience. With Ethereum's upgrades in the future, Swell is expected to adapt to market changes and offer top-notch services.

Swell Tokenomics

The native token of the Swell Network is SWELL, with a supply of 10 billion tokens. The TGE supply is 1.3 billion tokens, accounting for 13% of the total. Specifically, 35% of the total supply is allocated to the community, 25% to the team, 25% to early investors, and 15% to the foundation.

SWELL tokens have multiple functions. Token holders enjoy governance rights and can submit proposals, vote on protocol changes, adjust staking and transaction fees, and decide on whether to remove node operators on the Swell DAO governance platform. Token holders can also earn SWELL token incentives through staking, provision of liquidity, and participation in referral programs.