Crypto Gloss

Swell Network

Swell Network is a vertically integrated DeFi protocol covering the full Ethereum yield stack: native liquid staking (swETH), liquid restaking (rswETH), and an L2 blockchain (Swell Chain) — making it the only protocol that controls each layer from validator selection through rollup security. Launched in mid-2023, Swell grew rapidly through its Voyage points program (accumulating SWELL governance token allocation for depositing ETH, using swETH/rswETH in DeFi, and participating in ecosystem activities), ultimately attracting $1-2B+ in TVL across its staking and restaking products at peak. Swell Chain — its OP Stack-based Layer 2 — differentiates Swell from every other liquid staking and restaking protocol by using restaked ETH (via EigenLayer AVS) as the security mechanism rather than Ethereum settlement alone, creating a vertically integrated loop: users restake ETH → Swell Chain gains security → Swell Chain activity generates fees → fees reward restakers. The SWELL token governs the protocol, distributed through the Voyage program and subsequent governance rounds, with Swell positioning itself as both an infrastructure layer AND an ecosystem L2 — a broader ambition than pure LRT competitors like Renzo or Puffer.

Key Facts

  • Category: Liquid Staking + Liquid Restaking + L2 (vertically integrated)
  • Launched: June 2023 (swETH liquid staking)
  • LRT token: rswETH (Swell Restaked ETH)
  • Liquid staking token: swETH (Swell ETH)
  • L2: Swell Chain (OP Stack; uses EigenLayer AVS for security)
  • Governance: SWELL token (Voyage points → SWELL)
  • TVL peak: ~$1-2B (liquid staking + restaking combined)
  • EigenLayer: native restaking AVS operator

Product Stack

The protocol’s products are described below.

swETH — Native Liquid Staking Token

  • Receives: swETH (liquid token: accrues ETH staking yield)
  • Non-rebasing: swETH exchange rate increases vs. ETH (not rebasing balance)
  • Validators: Swell-operated; expanding to permissionless validators
  • Fees: 10% of staking rewards (standard)
  • Use: DeFi collateral, Pendle markets, AMM liquidity

rswETH — Liquid Restaking Token

  • Receives: rswETH (accrues staking + restaking yield)
  • EigenLayer AVS: Swell delegates to EigenLayer operators; runs AVSs for extra yield
  • Benefit: stETH yield (~4%) + AVS fees + Voyage points + SWELL allocation

Swell Chain — OP Stack L2

  • Security innovation: uses restaked ETH (EigenLayer AVS) as additional security layer
  • Economic loop: users restake ETH → secure Swell Chain → Swell Chain generates fees → fees: shared with restakers
  • Token: no separate Swell Chain token (uses SWELL)
  • Pre-launch deposits: “Swell Chain deposit” campaign — early depositors: earn SWELL
  • Target: DeFi hub for restaking-focused applications

Swell Voyage Points

Program structure:

  • Voyage: off-chain points system → SWELL token allocation
  • Pearls: Swell’s points unit (1 Pearl per period per ETH equivalent deposited)
  • Activities earning Pearls:
    Deposit ETH → swETH (baseline)
    Deposit ETH → rswETH (+multiplier)
    Use swETH/rswETH in partner DeFi protocols (Pendle, Aave, etc.) (+bonus Pearls)
    Refer new users (+referral Pearls)
    Pre-deposit to Swell Chain (+additional allocation)
  • SWELL airdrop: Voyage points → SWELL at season end

Positioning vs. competitors:

  • Renzo: ezPoints; REZ airdrop → controversial
  • Ether.fi: ETHFI airdrop → well-received
  • Swell: SWELL airdrop → positioned as “fair”; timing after learning from Renzo/ETHFI precedent

Competitive Positioning

What makes Swell different:

  1. Vertical integration: LST + LRT + own L2 (unique among pure LRT competitors)
  2. Own L2 = fee capture: Swell Chain: sequencer fees → shared with SWELL holders
  3. Ecosystem control: can direct Swell Chain incentives to swETH/rswETH users
  4. EigenLayer native: uses restaked ETH for L2 security (not just ETH settlement)

Similarities to competitors:

  • Same EigenLayer restaking mechanism (common to all LRTs)
  • Same points-to-airdrop model used broadly
  • Similar TVL profile to Puffer, Kelp

Challenges:

  • Ether.fi: significantly larger TVL (weETH brand recognition)
  • L2 execution risk: Swell Chain: must attract developers AND liquidity to L2 to prove model
  • Points fatigue: users less excited about points campaigns post-Renzo controversy
  • Vertically integrated complexity: more products = more smart contract risk

Swell Chain Technical Details

Attribute Swell Chain
Stack OP Stack (Bedrock)
Settlement Ethereum mainnet
Security EigenLayer restaked ETH AVS
Sequencer Swell team (initially; decentralizing)
Token SWELL
DA Ethereum (calldata/blobs)
EVM Full EVM compatibility
Launch 2024

Related Terms

Sources

  1. “Swell Network: Building the Restaking Flywheel with LST + LRT + L2 Integration” — Swell Protocol / Technical Overview (2024). Official and community technical analysis of Swell’s vertically integrated architecture — examining how swETH (liquid staking), rswETH (liquid restaking), and Swell Chain (OP Stack L2) interact economically, the specific EigenLayer AVS design powering Swell Chain’s security, the planned fee distribution model (Swell Chain sequencer revenue → rswETH holders → restaking flywheel), and how Swell’s integrated approach compares to the fragmented LRT + L2 landscape where protocols typically specialize in one layer.
  1. “Swell Voyage Points: Distribution Design and Learnings from the LRT Airdrop Meta” — TokenInsight / Points Program Analysis (2024). Comparative analysis of Swell’s Voyage points program versus competitor point programs (Ether.fi’s Season 1, Renzo’s ezPoints/REZ) — examining Swell’s specific Pearl allocation mechanics, multiplier structure (DeFi usage bonuses), how Swell positioned its SWELL airdrop expectations vs. competitors, whether learning from Renzo’s distribution controversy improved Swell’s community reception, and the broader meta-economics of the LRT “points arms race” where protocols competed for deposits by offering increasingly generous points-to-airdrop conversion expectations.
  1. “rswETH DeFi Integration: Pendle Markets, Aave Collateral, and LP Strategies” — Pendle Finance / Swell Research (2024). Technical analysis of rswETH’s DeFi composability — focusing on Pendle Finance markets for rswETH (splitting yield into PT-rswETH and YT-rswETH), Aave v3 collateral usage, curve liquidity pool dynamics, and the interaction between Swell’s Voyage points system and DeFi usage multipliers (users earn more Pearls by deploying rswETH into partner protocols — creating aligned incentives for DeFi integration depth).
  1. “Swell Chain: Can Restaking-Secured L2s Compete with OP Stack Giants?” — L2 Research / Swell Chain Analysis (2024). Analysis of Swell Chain’s positioning as an EigenLayer AVS-secured OP Stack L2 — examining the competitive landscape (Base with 50M+ users, Optimism with OP governance, Arbitrum with DeFi TVL leadership, Mode and other smaller OP Stack chains), the specific security model (restaked ETH AVS: what it means, what it doesn’t), why new L2s struggle to attract developer activity without unique distribution advantages, and whether Swell Chain’s restaking-native economic model is sufficient differentiation in a crowded L2 market.
  1. “Swell’s Role in the LST and LRT Wars: Competing with Lido, Rocket Pool, and Ether.fi Simultaneously” — DeFi Research Collective / Market Position Analysis (2024). Analysis of Swell’s unique position as a competitor in both the LST (liquid staking) market (against Lido, Rocket Pool, Frax) and the LRT (liquid restaking) market (against Ether.fi, Renzo, Puffer) — examining the resource allocation challenge (competing in two markets simultaneously), whether swETH can meaningfully challenge stETH’s liquidity moat, whether rswETH can challenge weETH’s TVL lead, and whether vertical integration creates compounding advantages or compounding complexity.