Ethereum re-staking track new star Swell Network
In recent years, with Ethereum's transition to the PoS (Proof of Stake) mechanism, the staking sector has gradually become a popular track in the blockchain field. Users participate in network consensus and earn rewards by staking ETH; however, the liquidity issue 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 address this issue, liquid staking protocols have emerged, such as Lido and Rocket Pool, providing liquidity derivatives that allow users to earn staking rewards while participating in the DeFi ecosystem. However, as competition in the sector intensifies, simple liquidity derivatives can no longer fully meet users' demands for decentralization, flexibility, and yield optimization, leading to the emergence of re-staking.
Swell Network stands out with its innovative decentralized liquid staking mechanism. As an emerging liquid staking protocol, Swell Network offers unique swETH and swNFT products, enhancing user autonomy and transparency.
1. What is Swell Network?
Swell Network is a decentralized, non-custodial Ethereum liquid staking protocol dedicated 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 funds and receive liquidity tokens swETH and rswETH, enabling further participation in other DeFi protocols for higher investment returns. The platform employs innovative mechanisms that allow users to enjoy staking rewards while also re-staking on platforms like EigenLayer for additional returns, significantly enhancing capital utilization.
As the first protocol to allow users to freely choose node operators, Swell breaks the high entry barriers of the staking market and reduces technical barriers, thus promoting the decentralization of staking services. The platform also integrates Chainlink's Proof of Reserve (PoR) feature, supporting automated on-chain audits, providing users with high security and transparency. Swell's mission is to provide the best liquid staking and re-staking experience globally, simplifying users' entry into the DeFi ecosystem while promoting the sustainable development of the Ethereum ecosystem, offering multiple value supports for stakers, node operators, and the entire Ethereum network.
2. 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 offers rich functionalities for stakers and node operators through unique mechanisms and a high degree of freedom in node operation.
Swell operates completely differently 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): Added after strict review, required to provide 1 ETH as collateral. The first batch of whitelisted nodes includes well-known operators like InfStones, RockX, HashQuark, etc.
- Independent Node Operators: Can join without permission but must provide a 16 ETH deposit for each validator.
Node operators can set their own commission (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 freedom of participation, thus promoting platform decentralization.
- Atomic Deposits and Flexible Staking
Swell supports atomic deposits with a minimum of 1 ETH, allowing users to choose their node operators and stake ETH directly 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 node operator, validator address, and staking timestamp.
- Unique Features of swETH and swNFT
- Functionality of swETH: swETH, as a non-rebase liquidity token, can be used in DeFi protocols to earn additional yields but does not automatically accumulate staking rewards.
- Functionality of swNFT: swNFT is a container for swETH, storing staking rewards, equity information, etc. Even if users do not hold swETH, swNFT can still continuously accumulate rewards.
- Staking Rewards and Redemption Mechanism
When users want to withdraw staking rewards or principal, they need to burn swNFT to redeem ETH. After merging, the withdrawal function is expected to be opened within 6-12 months, and the liquidity of swETH mainly relies on secondary market trading.
- Competition and Transparency
Swell provides an open market competition mechanism where node operators compete on transparency, return rates, and fees to attract more stakers. In the future, a smooth pool similar to Rocket Pool will be introduced to optimize yield distribution and MEV rewards.
- Protocol Security and Multi-Stage Launch
Swell's secure launch plan is divided into five stages, currently in the first stage, with 242 ETH deposits and 8 whitelisted nodes. The advancement of each stage depends on reaching ETH thresholds. The protocol employs Chainlink PoR technology for on-chain audits, ensuring the platform's security and transparency.
3. Swell Network Team and Funding 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 Head of Research Abishek Kannan. Daniel Dizon is responsible for the overall strategy and direction of the project, Aaron Alderman oversees technical development and platform architecture, Kevin Chee handles product development and user experience, while Abishek Kannan leads research and innovation efforts.
Currently, Swell Network has received support from investment funds such as Framework Ventures, IOSG Ventures, Apollo Capital, Maven 11 Capital, and Bixin Ventures. Additionally, individual traders have also invested in standard tasks such as Mark Cuban, David Hoffman, and Loong Wang…
4. Swell Network Token Economics
Swell Network's native token $SWELL has a total supply of 10 billion tokens, designed to facilitate protocol governance, ecosystem development, and user incentives, with multiple uses:
Governance Participation: SWELL token holders can vote on important decisions affecting the development and direction of the protocol. Swell Network and its governance token SWELL represent an exciting evolution in 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 significant 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 two 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)
Reserve Fund: 16% (1,600,000,000 SWELL)
5. Future Value Analysis of SWELL
Swell Network, as a non-custodial ETH liquid staking protocol, demonstrates enormous market potential and development space. According to official data, the total staked ETH amount on Swell Network currently reaches 281,553 ETH, with a base annual percentage rate (APR) of 2.33% for swETH, while the total annual yield can reach as high as 28.85% through the SWELL incentive mechanism. The total number of stakers has surpassed 128,538, indicating market recognition of its innovation and high yields.
As Swell Network continues to innovate in the DeFi space, its development prospects are broad. The upcoming layer two solution aims to enhance user experience by providing faster transaction speeds and lower fees. Additionally, partnerships with leading DeFi risk management companies will improve security measures within the protocol.
