ETH
by BSCN
March 13, 2024
Unlike traditional staking methods that lock up assets, Swell allows users to stake their ETH and receive liquid staking tokens (LST), providing liquidity while still earning rewards.
Staking cryptocurrencies has emerged as a favored avenue for investors seeking passive income. However, the conventional staking model often constrains assets, hindering their utilization in other decentralized finance (DeFi) activities.
Liquid staking protocols like Swell aim to revolutionize this landscape by offering a solution that unlocks the full potential of staked assets.
Swell is a Decentralized Finance (DeFi) protocol that pioneers liquid restaking for Ethereum (ETH) holders. Unlike traditional staking methods that immobilize ETH until the staking period concludes, Swell enables users to deposit their ETH and receive a liquid staking token (LST), presently named rswETH.
This token represents the staked ETH alongside its accrued rewards, allowing users to freely trade or employ it in various DeFi applications.
The uniqueness of Swell lies in its implementation of restaking through the EigenLayer protocol. Instead of directly staking ETH on the Ethereum blockchain, Swell leverages EigenLayer to distribute ETH across a network of Actively Validated Secured Services (AVSs), essentially additional blockchains supporting various DeFi protocols.
This restaking mechanism enables users to earn additional rewards atop the standard staking benefits offered by Ethereum.
Swell prides itself on a user-friendly interface and intuitive process, making staking accessible to all. The steps are reportedly straightforward:
Swell secured $3.75 million in a seed round co-led by Framework, IOSG Ventures, and Apollo Capital. Its distinctive value proposition lies in lowering the entry barrier for Ethereum staking to just 1 ETH, while also providing liquidity through an interest-bearing token representing users' stakes. Swell's staking process additionally enables users to earn extra interest through in-app vaults.
Worth noting, Swell Network has also announced plans to launch its own Ethereum layer-2 chain in H2 2024.
However, Swell, like any DeFi protocol, relies on smart contracts, which can be vulnerable to hackers. Further, when withdrawing your rswETH, you may experience an impermanent loss if the price of ETH fluctuates significantly.
Disclaimer
Disclaimer: The views expressed in this article do not necessarily represent the views of BSCN. The information provided in this article is for educational and entertainment purposes only and should not be construed as investment advice, or advice of any kind. BSCN assumes no responsibility for any investment decisions made based on the information provided in this article. If you believe that the article should be amended, please reach out to the BSCN team by emailing [email protected].
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