Swell is redefining Ethereum’s liquid staking and restaking landscape

Overview

• What is Swell?

• Liquid Staking With Swell

• Liquid Restaking With Swell

  • How Does It Work?

• Swell and Metronome

• Summary

What is Swell?

Swell is on a mission to transform liquid staking and restaking by making it intuitive and efficient while simultaneously reinforcing Ethereum’s future.

With Swell, you can effortlessly earn passive income by staking ETH, securing both on-chain rewards and extra AVS rewards. In return, you’ll receive dynamic a yield-bearing token (LST or LRT) that doesn't just sit idle, they are your gateway to continued earnings across DeFi. This means your assets keep growing, even while they’re in use, putting your crypto to work in smarter, more powerful ways.

Liquid Staking with Swell

Liquid staking builds on traditional staking by minting a token that represents staked assets. For instance, when you deposit ETH into Swell, you get an LST token (swETH) that reflects your stake. You can then use this token in DeFi while still earning rewards.

Liquid staking was created to tackle issues with Ethereum’s native staking, particularly the steep 32 ETH entry barrier. It enables users to stake smaller amounts, providing liquidity and flexibility.

Unlike traditional staking, liquid staking keeps your assets accessible, reducing the risk associated with long-term lock-ups and offering more strategic options across DeFi protocols. Due to the reduction from 32 ETH to any nominal amount, many more users are able to participate, increasing the number and distribution to help secure the network.

Liquid Restaking with Swell

Liquid restaking takes the concept of liquid staking a step further, where users receive a yield-bearing token (like swETH) after staking ETH. Liquid restaking enables users to stake this yield-bearing token itself, unlocking additional layers of rewards that were not previously available.

Swell makes restaking easier for the user by essentially acting as a middleman. Traditionally, restaking may have required users to manually set up an operator and choose which Actively Validated Services (AVSs) to work with. This typically involves in-depth technical knowledge and effort. However, Swell simplifies this by handling the technical aspects for you. When you stake ETH with Swell, they not only give you swETH but also manage the restaking process by depositing your assets into protocols like EigenLayer.

Through this process, Swell issues rswETH, a restaked version of your yield-bearing token. This means you earn additional rewards on top of your original staking rewards without having to go through the complexities of setting up restaking yourself.

The primary benefit of liquid restaking with Swell is the ability to earn compound rewards. By staking your swETH through Swell, you earn AVS rewards in addition to the regular staking rewards. This dual-earning potential can significantly increase your returns on the same initial staked amount of ETH.

Another key advantage of using Swell for liquid restaking is the ease of access and flexibility it provides. Swell enables you to easily enter and exit staking positions, meaning you can continue to utilize your tokens in DeFi while they are staked on any supported protocols. This liquidity is a crucial advantage, as it means your assets are not locked up and can be redeployed as needed, all while still earning rewards.

How Does It Work?

Swell uses a permissioned set of professional node operators to ensure scale, reliability, and consistent yield for users. As Swell grows, the goal is to transition to a permissionless system, enabling more node operators to participate once there is sufficient liquidity, stability, and risk management technologies, such as Distributed Validator Technology (DVT).

When a node operator is whitelisted, their address is added to the node operator registry contract. This enables them to add validator keys to the contract, increasing staking capacity for Swell users.

Node operators are vital to maintaining the security and stability of swETH. Their role extends beyond just running a node, it involves active community participation and commitment to the network’s principles. This includes ensuring that their nodes are secure and stable, regularly updating their software, contributing to governance and decision-making processes, and upholding decentralization principles.

Swell and Metronome

For the first time ever, Metronome is uniquely servicing the ETH LRT ecosystem with our msETH lending market. Initially, users will have the ability to borrow msETH against rswETH collateral, enabling looping exposure to the asset's yield and points programs.

Thus far, looping strategies for ETH LRTs require naked ETH borrowing. By introducing our synthetic ETH token, we enable looping exposure in a more capital-efficient manner.

Aligning with Swell means we are able to tap into the growing demand for liquid staking and restaking, ensuring that users have access to secure and efficient opportunities.

For more, read the recent announcement here.

Summary

Swell is changing how people engage with liquid staking and restaking by making it easier to earn rewards while keeping assets liquid and flexible. With Swell handling the complexities behind the scenes, users can focus on maximizing their returns, knowing their assets are working efficiently and securely. The recent partnership between Metronome and Swell broadens the opportunities for users are they will be well-equipped to potentially grow their holdings and tap into advanced DeFi strategies that were previously not possible.