In recent years, with the transition of Ethereum to the PoS (Proof-of-Stake) mechanism, the staking track has gradually become a popular track in the blockchain field. Users participate in network consensus and receive rewards by staking ETH, but the liquidity problem of traditional staking has always existed: the staked ETH is locked and cannot be used for other DeFi activities, resulting in a loss of capital efficiency. To solve this problem, liquid staking protocols have emerged, such as Lido and Rocket Pool, providing liquid derivative products, allowing users to not only obtain staking rewards, but also participate in the DeFi ecosystem. However, with the intensification of competition in the track, the simple liquid derivative products can no longer fully meet the user's demand for decentralization, flexibility and yield optimization, and the re-staking track has emerged. Swell Network stands out with its innovative decentralized liquid staking mechanism. As an emerging liquid staking protocol, Swell Network provides unique swETH and swNFT products, enhancing user autonomy and transparency.
I. What is Swell Network?
Swell Network is a decentralized, non-custodial Ethereum liquid staking protocol, committed to providing users with convenient staking and re-staking services, while ensuring the security and decentralization of the Ethereum network. Unlike traditional staking methods, Swell allows users to stake ETH without locking up their funds, and receive liquid tokens swETH and rswETH, which can be further used in other DeFi protocols to achieve higher investment returns. Through innovative mechanisms, the platform not only allows users to enjoy staking rewards, but also enables them to re-stake on platforms like EigenLayer to obtain additional returns, greatly improving the capital utilization rate. As the first protocol that allows users to freely choose node operators, Swell breaks the high entry barrier of the staking market, reduces the technical threshold, and promotes the decentralization of staking services. The platform also integrates Chainlink's Proof of Reserve (PoR) function, supporting automated on-chain auditing, providing users with high security and transparency. Swell's mission is to provide the best global liquid staking and re-staking experience, simplify the path for users to enter the DeFi ecosystem, and promote the sustainable development of the Ethereum ecosystem, providing multi-dimensional value support for stakers, node operators, and the entire Ethereum network.
II. Swell Network Operation Logic
As an innovative decentralized, non-custodial Ethereum liquid staking protocol, Swell Network's core goal is to provide users with a flexible, transparent and high-yield staking and re-staking experience. Unlike traditional staking protocols, Swell V2, through its unique mechanisms and highly autonomous node operator model, offers rich functionalities for both stakers and node operators.
Swell's operation is completely different from other Ethereum liquid staking protocols. In its final state, Swell V2 will involve:
- Node Operator Mechanism
Swell's node operators are divided into two categories:
- Whitelisted Node Operators (Validator Nodes): After strict review, they need to provide 1 ETH in collateral. The first batch of whitelisted nodes includes well-known operators such as InfStones, RockX, and HashQuark.
- Independent Node Operators: They can join without permission, but need to provide 16 ETH in collateral for each validator.
Node operators can set their own commissions (0-10%), and 5% of the staking rewards will be used as protocol fees, entering the Swell DAO treasury. In the future, independent nodes will have greater participation freedom, driving the platform's decentralization.
- Atomic Deposits and Flexible Staking
Swell supports atomic deposits of at least 1 ETH, and users can choose their own node operators to directly stake to the Beacon Chain.
- After depositing, users will receive two types of assets:
- swETH: An ERC-20 liquid staking derivative token, representing the user's staked principal.
- swNFT: A unique token containing staking details, recording the node operator, validator address, and timestamp.
- Unique Functions of swETH and swNFT
- Functions of swETH: As a non-rebasing liquid token, swETH can be used in DeFi protocols to obtain additional yields, but will not automatically accumulate staking rewards.
- Functions of swNFT: swNFT is the container of swETH, storing staking rewards, rights information, etc. Even if the user does not hold swETH, the swNFT can still continuously accumulate rewards.
- Staking Rewards and Redemption Mechanism
When users want to withdraw staking rewards or principal, they need to burn the swNFT to redeem ETH. After the merge, it is expected that the withdrawal function will be opened in 6-12 months, and the liquidity of swETH will mainly depend on secondary market trading.
- Competition and Transparency
Swell provides an open market competition mechanism, where node operators compete in terms of transparency, return rates, and fees to attract more stakers. In the future, a smoothing pool similar to Rocket Pool will also be introduced to optimize the distribution of rewards and MEV rewards.
- Protocol Security and Multi-Stage Launch
Swell's secure launch plan is divided into five stages, and it is currently in the first stage, with 242 ETH in deposits and 8 whitelisted nodes. The progress of each stage depends on the achievement of the ETH threshold. The protocol uses Chainlink's PoR technology for on-chain auditing, ensuring the security and transparency of the platform.
III. Swell Network Team and Financing Information
The core members of the Swell Network team include founder Daniel Dizon, Chief Technology Officer (CTO) Aaron Alderman, Chief Product Officer (CPO) Kevin Chee, and Research Lead Abishek Kannan. Daniel Dizon is responsible for the overall strategy and direction of the project, Aaron Alderman is responsible for technical development and platform architecture, Kevin Chee is responsible for product development and user experience, and Abishek Kannan leads the research and innovation work. Currently, Swell Network has received "support" from investment funds such as Framework Ventures, IOSG Ventures, Apollo Capital, Maven 11 Capital, and Bixin Ventures. In addition, individual traders have also invested in the projects of Mark Cuban, David Hoffman, Loong Wang, and others...
IV. Swell Network Token Economics
The native token of Swell Network, $SWELL, has a total supply of 10 billion, designed to promote protocol governance, ecosystem development, and user incentives, with multiple uses: Governance Participation: SWELL token holders can vote on important decisions that affect the development and direction of the protocol. Swell Network and its governance token SWELL represent an exciting evolution of Ethereum staking and DeFi participation. By focusing on accessibility, liquidity, and community engagement, Swell Network not only enhances user interaction with Ethereum, but also makes important contributions to the broader adoption of blockchain technology in the financial sector. Re-Staking Rewards: Users can re-stake their SWELL tokens to earn rSWELL tokens, which help protect Swell's Layer 2 infrastructure while earning additional rewards. Trading Opportunities: SWELL tokens can be traded on various exchanges such as Kucoin and Bitget, allowing users to buy and sell based on market conditions.
The distribution is as follows: Ecosystem and Community: 37% (3,700,000,000 SWELL), Team and Advisors: 23.5% (2,350,000,000 SWELL), Investors: 23.5% (2,350,000,000 SWELL), Treasury: 16% (1,600,000,000 SWELL).
V. Analysis of the Future Value of SWELL
As a non-custodial ETH liquid staking protocol, Swell Network has shown tremendous market potential and development space. According to the official website data, the current total staked ETH of Swell Network has reached 281,553, with the base annual yield rate (APR) of swETH at 2.33%, and the total annualized yield rate reaching as high as 28.85% through the SWELL incentive mechanism. The total number of stakers has exceeded 128,538, demonstrating the market's recognition of its innovation and high returns. As Swell Network continues to innovate in the DeFi field, its development prospects are broad. The upcoming layer-2 solution aims to enhance the user experience by providing faster transaction speeds and lower fees. Furthermore, the collaboration with leading DeFi risk management companies will improve the security measures within the protocol.
