Welcome to Swell Network. This is the first part of an in-depth educational series that covers all aspects of the Swell Protocol. In this post we’ll give a high level overview of Swell Network and the different users that will be able to harness the power of Swell and its infrastructure. If you haven’t already, check out our introductory article for a TL;DR on on Swell.
Swell aims to contribute to the ongoing decentralization of Ethereum by providing a differentiated liquid ETH staking approach for ETH holders and Node Operators
At the time of writing, 10% of all circulating ETH is locked in the ETH2 staking contract. This pales in comparison to the average of 50% native tokens being staked in other proof-of-stake blockchains. This shows us that there are millions of ETH waiting to be staked to secure the Ethereum network. We expect the staking industry to grow exponentially as Ethereum transitions to proof-of-stake and billions of dollars in ETH get deployed.
What is Swell?
Swell is a permissionless, non-custodial, and liquid ETH staking protocol that is built for stakers, node operators, and the ETH ecosystem. As a pioneer of next-gen ETH staking (Staking 2.0) Swell Network offers a superior staking experience for stakers through Swell's Financial NFTs (swNFTs) and Swell vaults — enabling higher returns all in one place.
A few more highlights of Swell are the following:
- It is the first protocol to use atomic transactions where as a staker you directly stake your ETH to a validator, reducing protocol risk.
- Secret Validator Technology, also known as the SVT is a mechanism that helps to mitigate the risk for slashing and penalties, which leads to the higher risk adjusted return.
The Swell Philosophy
Long story short, Swell is aiming for staking 2.0 to build a public trust on top of Ethereum by differentiating and bringing to the market something that is completely new and different. There is clear demand in the Ethereum community for a better staking experience, and that's exactly what we intend to deliver.
Swell plans to achieve these goals through the following:
- Building the first permissionless protocol to leverage SSV technology which provides greater assurance for stakers.
- Pioneering a simpler staking experience for Ethereum community members, allowing them to easily compound their yield.
- Enabling other businesses, particularly node operators, to build on top of the Swell Protocol.
Choose Your Fighter
Swell Network is built to cater to all different types of users that wish to engage in liquid staking or run a validator on the Ethereum Network, from hobbyist node operators to professional Staking-as-a-Service (SaaS) businesses.
The protocol was designed to combine the best features of existing liquid staking solutions into one. Swell, by default, is a permission-less protocol for node operators.
This means that existing and future node operator entities will be able to harness the power of Swell in the same way as the hobbyist validator, and liquid staker.
The Liquid Staker
When stakers deposit their ETH with Swell, they receive an equal amount of Swell Ether (swETH) in return which is a 1:1 derivative token of ETH. In addition to the swETH, stakers are minted a financial NFT, called Swell NFTs (swNFT) that acts as a container for the staking rewards and tracks the ETH staked on the beacon chain.
Additionally the dapp will offer Swell Vaults, built on the new ERC-4626 standard. Swell Vaults will allow stakers to deposit their swETH into different liquidity, lending, and option strategies across DeFi, all within the Swell dapp.
Think of swETH as a receipt for your ETH staked into the ETH2 staking contract and the swNFT as a bucket that collects your staking rewards and tracks your staked ETH on the Beacon chain. Ultimately for stakers, Swell will provide a more attractive and user-friendly experience through Swell ETH, Swell NFTs and the power of Swell Vaults.
The Permissionless Node Operator
Swell will provide any node operator with the ability to easily stake and secure the Ethereum network with as little as 16 ETH. The remaining 16 ETH comes from the liquid stakers who are staking their ETH with Swell and receiving swETH.
Permissionless node operators will be able to brand their node and set their own commission rate.
At first the requirement for permissionless node operators will be 16 ETH. As time goes on Swell aims to be the first permissionless staking protocol to integrate Shared Secret Validator (SSV)—also known as Distributed Validator Technology (DVT)—to reduce the financial commitment for running a node to as little as 1 ETH.
The Verified Node Operator
Swell will serve as an enabling back-end infrastructure for node operators to leverage Swell. This will be made in a fully white-labelled manner, meaning that node operator entities will be able to build on top of the protocol with Swell operating behind-the-scenes and beneath-the-ground as an infrastructure layer. Our managed Node-as-a-Service offering allows clients, to run their own branded nodes and set their commission rate allowing Node Operators to offer staking services to their users while Swell manages the infrastructure. This opens up many possibilites for future and existing staking-as-a-service providers to harness the power of Swell to benefit and grow their own brand.
This combines the best of existing solutions by creating a robust ecosystem for white labelled and permissionless node operators. This means stakers get an even wider selection of node operators to choose from, when deciding where to stake their ETH.
Join the Squad
Thanks for reading! If you have any questions, or just want to hang out with other staking enthusiasts, join our public Discord server and say hello!
You can stay up to date on the protocol by following Swell on Twitter.