[SSV] DAO Grants - Swell Network | Delivering the Next-Generation of ETH Staking
Primer: Swell Network is a permissionless, non-custodial, and liquid ETH staking protocol. Their protocol is built on top of the Secret Shared Validator (SSV) technology, which is a project built by SSV Network. Find out about Swell Network in this AMA hosted by SSV Network to learn how this technology makes Swell Network stand out from the current liquid ETH staking solutions.
Background
Daniel Dizon
Co-Founder and CEO of Swell Network
Background in finance, tech, and innovation
Lecky Lao
CTO and Co-Founder of Swell Network
Have been a software engineer for more than 10 years
Started being a serial entrepreneur since 2016
Working for multiple DeFi DApps like Instadapp, dHEDGE, and Synthetix
Swell Network
ETH staking protocol that is permissionless, non-custodial, and liquid
Supported by industry-leading backers
Have several first-to-market innovations
Have completed building their smart contracts for Swell V2
Issues That They Are Solving
Risk of centralization
Staking is complex. They will be improving the experience for stakers
There is a lack of competing options on the market for stakers to diversify their stake. They provide another option on the market
How Does It Work
Stake your ETH in a liquid manner and earn staking rewards
The liquidity (swETH) is containerized in an NFT
The NFT marks your position within the validators
The NFT can be compounded in Vaults
“And the beauty of this, it's all self-contained within one app. So it's a single place for you to stake, set, and forget.”
- Daniel Dizon
Leverages Secret Shared Validator (SSV) technology to reduce the risk of slashing and penalties
Their Yield
Stake: 5%
Stake & Vault: 7%
Stake & Vault (Post-Merge): 17%
Value Proposition
First in the market to:
Enable node operator validated contribution to as little as 1 ETH
Do atomic deposit contract to enable user-directed deposits
Containerize liquid staking token within an NFT
Points Of Differentiation
Node operators will be able to set their own commissions
Allows stakers to have a choice as to their node operators
Enables a white label solution — node operators putting a frontend and using their protocol on the backend
Swell Network And SSV DAO
When both protocols combine, you get:
More decentralization
Better returns with lower risk
Improved composability
Why Did They Structure Their Product Within An NFT?
When users deposit their ETH, they get back a swNFT
The swNFT contains swETH
It’s inspired by Uniswap V3’s NFT positions
The rewards are calculated at the point of withdrawal
Rewards are accrued from the point of staking
They have a lower cost of staking compared to other protocols
swNFT holders can choose to opt in to the Vault
Their Vaults work similarly to Yearn vaults
The swNFT identifies which validator you are staking on
Withdrawal process: NFT is burnt —> rewards calculated from the beacon chain —> swETH is minted for the user
Cost Of Staking And Unstaking
Occurs on layer 1 and will be expensive
Is cautious about cost and is targeting a cost of $100 for minting a swNFT
Unstaking costs more
Atomic Transactions
Will have their head of product explain the innovation to the public
Their testnet will be available soon for people to test and understand it more
Will be rolling out more talks, videos, documentation, and demos to help people understand
How Does Secret Shared Validator (SSV) Fit Into Swell Network?
On day 1 of their roadmap, they have already wanted to integrate SSV tech
They see SSV technology as critical infrastructure for improving the resiliency and risk profile of Swell Network
See themselves building on top of SSV
Both projects are helping each other
How Do Users Choose Their Own Node Operators?
Will help categorize node operators so that users can make an informed decision
Node operators that are on SSV will have an improved risk/return profile
Users will be able to tell which node operators return MEV rewards to stakers
Their Timeline
Developing and shipping Swell V2
Will launch a comprehensive ecosystem strategy after that
SSV tech will be in Swell V3, which will be implemented in the 2nd half of the year
In 2023, they will be moving cross-chain
How Did They Hear About SSV Technology In The Beginning?
Have been closely following Ethereum research
SSV technology was proposed by the Ethereum Foundation
Saw that SSV Network (formerly Blox) became part of the working group and started developing the technology
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