Overview
Swell Network is a decentralized staking platform designed to revolutionize how users engage with Ethereum staking and Layer 2 (L2) applications. With a focus on scalability, governance, and restaked security, Swell introduces a novel approach to staking with its native token, SWELL. The upcoming launch of SWELL marks a significant milestone in the platform’s journey towards decentralization, offering stakers new opportunities in governance, security, and ecosystem participation.
An overview of how restaking on Swell L2 works | Source: Swell Network on X
Core Features
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Restaking for Layer 2 Security: Swell’s L2 ecosystem leverages SWELL through restaking, where users stake their SWELL tokens to secure Swell L2 infrastructure. In return, restakers receive rSWELL, a liquid restaking token that can be deployed across decentralized finance (DeFi) platforms for additional yield. rSWELL also holds governance power within the Swell DAO, allowing holders to influence the protocol's future.
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Decentralized Governance via Swell DAO: SWELL token holders gain governance rights within the Swell DAO. Responsibilities of the DAO include managing liquidity incentives, voting on protocol parameters, distributing grants for L2 development, and coordinating node operator selection. Governance participation is weighted by the number of SWELL or rSWELL tokens held.
SWELL Token and Tokenomics
The native token of Swell Network, SWELL, has a total supply of 10 billion tokens. It is used for two main purposes: governance and securing the network through restaking.
Token Use Cases
The SWELL token plays a crucial role in the Swell ecosystem by supporting governance and securing the Layer 2 infrastructure. Below are its primary functions:
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Governance: SWELL token holders can participate in Swell DAO governance by submitting and voting on proposals. Governance decisions include protocol upgrades, liquidity incentives, and the management of grants within the ecosystem.
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Restaking and Rewards: Users can restake their SWELL tokens to receive rSWELL, a liquid restaking token. Restakers earn rewards for contributing to network security and can also deploy rSWELL in DeFi platforms to generate additional yield. The rSWELL token carries equivalent governance power to SWELL, enhancing user participation across the protocol.
Token Allocation
The total supply of SWELL is 10,000,000,000 tokens. The distribution plan aligns with the project’s objectives of decentralization, community involvement, and protocol sustainability:
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Voyage Airdrop (8.5%)
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700 million SWELL (7%) distributed linearly to stakers based on their accumulated White Pearls, a metric tracking contributions before the July 30th, 2024 snapshot.
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1.5% Loyalty Bonus allocated to the most loyal stakers to reward early and long-term participation.
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SWELL claims will be open for 6 months after launch, with unclaimed tokens returning to the treasury.
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Vesting for Large Holders (0.3%)
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Top 0.3% of White Pearl holders (users who hold more than 208,997 White Pearls) are subject to a vesting schedule to ensure responsible distribution and reduce market risks.
Distribution Mechanism
7% of the total SWELL supply will be distributed linearly based on the number of White Pearls accumulated by each user before the snapshot on July 30, 2024. Stakers can claim their allocation through Swell’s Voyage platform, with unclaimed tokens returned to the treasury after six months.
Key Metrics and Milestones (as of October 2024)
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Number of Depositors: Over 52,000
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Total Deposited: Over $961 million
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swETH TVL: Over $286 million
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Total Staked ETH: Over 104,000
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rwsETH TVL: Over $221 million
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Total Restaked ETH: Over 84,000
Source: Swell Network
Swell DAO Roadmap Update
Swell DAO roadmap
Swell DAO is advancing through a three-phase roadmap designed to achieve full on-chain governance and decentralization. Here’s an overview of each phase:
Phase 0.1 – Laying the Foundation
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Focus on ecosystem growth through incentives and strategic partnerships.
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Community outreach and education initiatives to foster engagement.
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Onboard Actively Validated Services (AVS) using detailed research and selection.
Phase 1 – Building Governance Infrastructure
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Recruit and manage contributors within the DAO.
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Establish relationships and manage onboarding for node operators.
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Provide strategic direction for future partnerships and protocol development.
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Oversee financial management of Swell’s treasury, allocating funds for operations, research, and grants.
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Accumulate service fees to reinvest into insurance pools and development initiatives.
Phase 2 – Achieving Full Decentralization
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Develop and refine smart contracts and protocol parameters.
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Establish supporting technologies to enable on-chain governance and long-term sustainability.
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Ensure the DAO is fully equipped to manage the protocol’s evolution independently.
This phased approach ensures that Swell transitions to a community-driven model, empowering stakeholders to influence the platform’s future while maintaining operational efficiency.
Notable Developments
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Voyage Airdrop: A snapshot of Swell stakers was taken on July 30, 2024, to reward early participants with White Pearls, which are now convertible into SWELL tokens.
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rSWELL and DeFi Integration: rSWELL, Swell's liquid restaking token, is designed for broader use within DeFi applications. Users can deploy it across multiple platforms to earn yield while maintaining their governance power in the Swell DAO.
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Sybils Detected: In collaboration with an anti-Sybil provider, Swell identified 7,500 Sybil addresses, which will be excluded from the airdrop unless proven otherwise.
Upcoming Developments
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L2 Ecosystem Expansion: Swell’s upcoming L2 solution will drive greater utility for the SWELL token by incorporating DeFi projects and governance mechanisms.
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Cross-Chain Interoperability: Future development efforts will focus on making Swell’s L2 interoperable with other Layer 1 and Layer 2 networks, further enhancing its scalability.
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Institutional Interest: Swell has gained significant attention from institutional investors, with major DeFi platforms and node operators eyeing potential collaborations.
Community and Ecosystem
Swell boasts a robust community of stakers and developers, continuously working towards decentralizing the protocol and expanding its ecosystem. The Swell DAO plays a crucial role in determining protocol governance and development, with active participation expected to grow as Swell L2 launches and new initiatives roll out.
Conclusion
Swell Network stands out for its unique restaking model, governance mechanisms, and low-cost Layer 2 scalability. With the launch of its native SWELL token and upcoming ecosystem developments, Swell is well-positioned to become a key player in Ethereum staking and decentralized applications.
