Swell Ethereum (swETH) is a liquid staking token (LST) on the Swell protocol, representing ETH staked on the Ethereum network. Chainlink Proof of Reserves validates the underlying ETH. swETH functions as a repricing token, increasing in value over time as staking rewards accumulate. ^[1]

Overview

Swell Ethereum (swETH), an ERC-20 token, mirrors a user’s staked ETH on the Ethereum blockchain, encapsulating rewards, penalties, MEV, and execution layer ‘tips.’ While its quantity remains constant, its value grows with on-chain rewards accumulation, with total gains realized upon trading on the secondary market or permitted withdrawals post-Ethereum Shanghai upgrade, defining it as a reward-bearing token tracked via an exchange rate. Liquid staking decentralizes staking responsibilities between stakers and node operators, enabling stakers to deposit any amount below 32 ETH and receive a liquid token representing their staked ETH and accrued rewards. This token operates akin to ETH in DeFi, facilitating transfers, collateralization for borrowing, and liquidity provision while earning staking rewards, thus broadening participation in securing the Ethereum blockchain. ^[2]

Use Cases

swETH holders have various options to utilize their staked ETH: ^[2]

• Exit Staking: They can sell their swETH for ETH on a decentralized exchange, realizing gains based on the Swell exchange rate.
• Swell Vaults: Deposit swETH into Swell’s in-protocol vaults to earn extra yield through liquidity mining.
• Provide Liquidity: Utilize external DeFi integrations of swETH to become a liquidity provider, earning additional yield from trading fees and liquidity mining incentives.
• Lending: Earn extra yield by supplying swETH to lend/borrow DeFi protocols.
• Borrowing: Use swETH as collateral to borrow assets from lending protocols.