Swell Network is a decentralized protocol built on Ethereum, designed to enhance capital efficiency and security through liquid staking and restaking solutions. By introducing innovative mechanisms like its native SWELL token and liquid restaking token (rSWELL), it allows users to participate in network security and governance while maintaining liquidity.
This guide explores Swell Network’s core features, tokenomics, roadmap, and growing role within the decentralized finance (DeFi) ecosystem.
What Is Swell Network?
Swell Network is a non-custodial liquid staking protocol that enables users to stake Ethereum (ETH) and receive liquid staking tokens (LSTs) in return. These tokens can be used across various DeFi applications to generate additional yield. More recently, Swell has expanded into restaking, allowing users to contribute to the security of other networks and services while earning rewards.
Its architecture is community-driven, with a decentralized autonomous organization (DAO) governing key protocol decisions. The upcoming Swell Layer 2 (L2) solution aims to integrate these features into a scalable, low-cost environment, further boosting utility for stakeholders.
Core Features of Swell Network
Liquid Staking
Users can stake ETH to receive swETH, Swell’s liquid staking token. This allows stakers to earn rewards while using swETH across DeFi platforms for lending, borrowing, or providing liquidity.
Restaking for Enhanced Security
Swell introduces restaking mechanisms where users can stake SWELL or ETH to help secure external Actively Validated Services (AVSs) and Layer 2 networks. In return, participants receive rSWELL or other liquid restaking tokens, which represent their staked position and can be utilized in other DeFi protocols.
Decentralized Governance via Swell DAO
SWELL and rSWELL token holders can participate in the Swell DAO, which oversees protocol upgrades, treasury management, partnership decisions, and incentive distributions. Voting power is proportional to the number of tokens staked.
Layer 2 Integration
Swell is developing its own Layer 2 network to improve transaction scalability and reduce gas fees. The L2 will integrate natively with Swell’s staking and restaking products, creating a seamless user experience.
SWELL Tokenomics and Distribution
The SWELL token has a total supply of 10 billion tokens and serves two primary functions: governance and restaking.
Token Use Cases
- Governance: SWELL holders can propose and vote on changes to the protocol.
- Restaking: Users can restake SWELL to receive rSWELL, a liquid representation of their staked position that also carries governance rights.
Token Allocation
- Voyage Airdrop (8.5%): 7% was distributed to early stakers based on “White Pearls” (a loyalty metric), with a 1.5% bonus for the most active participants.
- Ecosystem & Treasury (Remaining): Funds are allocated for grants, partnerships, insurance pools, and future development.
Unclaimed airdropped tokens are returned to the treasury after a six-month claim period.
Swell DAO Roadmap
Swell’s transition to full decentralization is structured in three phases:
Phase 0.1: Foundation
Focus on ecosystem growth, education, and onboarding node operators and AVSs.
Phase 1: Governance Infrastructure
Establish contributor teams, manage treasury allocations, and develop on-chain governance tools.
Phase 2: Full Decentralization
Achieve autonomous protocol management through smart contracts and community-led initiatives.
Recent Developments and Performance
As of late 2024, Swell Network has demonstrated significant growth:
- Total value locked (TVL) exceeds $1.4 billion.
- More than 52,000 depositors have participated.
- Over 180,000 ETH has been staked or restaked.
The protocol has also taken measures to ensure fair token distribution, including Sybil detection mechanisms to filter out abusive wallet activities.
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Frequently Asked Questions
What is liquid restaking?
Liquid restaking allows users to stake assets to help secure other networks or services while receiving a liquid token in return. This token can be used across DeFi to earn additional yield.
How do I earn SWELL tokens?
Users can earn SWELL by staking ETH or participating in restaking activities. Early adopters were rewarded through the Voyage airdrop based on their historical activity.
What is the utility of rSWELL?
rSWELL is a liquid restaking token that represents a staked position in Swell’s restaking module. It can be used in DeFi applications and also grants governance rights within the Swell DAO.
Is Swell Network decentralized?
Yes, Swell is moving toward full decentralization through its DAO-based governance model, where token holders decide on protocol upgrades and treasury management.
What chains does Swell support?
Currently, Swell operates on Ethereum. Its upcoming Layer 2 solution will enhance interoperability with other Ethereum-based networks.
Can I use swETH in other DeFi protocols?
Yes, swETH is widely accepted across leading DeFi platforms for lending, liquidity provision, and collateralization.
Conclusion
Swell Network offers a comprehensive suite of staking and restaking products that balance yield generation, liquidity, and security. With a clear roadmap toward decentralization and a growing ecosystem, it is positioned as a major player in the Ethereum staking landscape. Its dual-token model and community-focused governance provide users with multiple avenues for participation and reward.
For those interested in liquid staking and restaking, Swell represents a compelling option with significant potential for integration and innovation.