The restaking world continues to captivate participants as OTC trading for protocol points opens up, details around airdrop dates emerge, and more. Ether.fi recently announced their $ETHFI Binance Launch pool, and people continue to speculate on the value of EigenLayer points.
In today’s edition, we’ll be distilling the details released around Swell Network’s recent announcement of their very own L2. 2023 saw several protocols create their own L2 or appchain, including Aevo, Lyra, dYdX, and more. It’s only natural that we would soon see Restaking protocols join the party…
Stay vigilant in the markets ⬇️
Background on Swell Network
Swell Network is a protocol which started out providing LST (Liquid Staking Token) services. Users can use $ETH to mint $swETH, while earning Pearls, which represent a soulbound token entitling each wallet to a portion of the eventual SWELL airdrop.
After expanding into the LRT realm, Swell quickly become a top protocol in this sector, with ~100k+ users, and $160M+ in TVL.
Swell Network L2
Swell made some headlines upon their announcement of their L2, which had been teased beforehand. Some key planned features of the L2 include increased scalability and lower fees compared to Ethereum mainnet.
New opportunities for creating restating flywheels will be possible on the chain. In addition, the chain will offers its users native Restaking yield, a step above MakerDAO’s native ETH staking yield, which is derived from Lido. This native yield will be greater than that of just staked ETH, and depending on when the chain launches, could include EigenLayer restaking points as well as Swells own restaking incentives.
As depicted above, Swell Network’s L2 integrates tech from:
Polygon
Swell Network’s L2 will come as its own zkEVM, using the Polygon zkEVM stack.
In addition, Swell will be using the Polygon CDK (Chain Development Kit), as also used by Immutable, Canto, Manta, Astar, Nubank in Brazil, X1 (OKX’s Chain), and more.
EigenLayer
Swell will bring multiple AVSs (Actively Validated Services) to the table. These services use the restaked ETH of EigenLayer to help secure Swell as well, hence the moniker ‘Restaked Rollup’.
AltLayer
AltLayer recently gained some popularity following it’s ALT airdrop.
AltLayer reportedly pioneered the framework of ‘Restaked Rollups’, which will be utilized by Swell.
Restaked Rollups by AltLayer can be further broken down into:
MCAH provides faster finality.
VITAL provides faster decentralized verification.
SQUAD provides decentralized sequencing.
“Restaked rollups combine the ease of spinning up rollups using rollup stacks such as Polygon CDK with the power of EigenLayer's restaking mechanism to bootstrap network security and build a decentralised network for core rollup services. It is exciting to see restaked rollups coming into production in the coming months. And that too by a great partner like Swell which is one of the largest LRTs in the market today. We are looking forward to supporting Swell in their restaked rollup journey, and the building out of LRTfi on the Swell rollup.”
- Yaoqi Jia, CEO of AltLayer
Chainlink
Swell announced it would be joining the Chainlink BUILD program in mid-February, granting the protocol access to the Oracle Provider’s oracle services and technical support.
As part of the Chainlink BUILD program, partners contribute a portion of fees; the new Swell L2 potentially provides a new fee generation source from sequencer fees, combined with fees the platform takes for staking and restaking.
In addition, Swell has integrated Chainlink CCIP earlier this year for secure cross-chain interoperability between Arbitrum and Ethereum mainnet. More restaking protocols, including Ether.fi, have integrated Arbitrum instances as some participants may be fee-sensitive. In an interesting move, Swell actually opted to choose Chainlink CCIP over LayerZero’s OFT (Omnichain Fungible Token) standard.
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