Swell L2 pre-launch deposits are open and TVL has hit more than $280M in less than a week!
In this Space on Swell L2 and the broader restaking ecosystem, we were joined by speakers from several of the projects behind the assets that you can deposit in the Swell L2 pre-launch.
In case you missed it, here are the top questions from the event.
What is Swell L2?
Swell has gone through a number of different chapters in its growth, and we see Swell L2 as the penultimate piece in tying everything together. Since its inception in 2023, Swell has always been an infrastructure provider, whether that's been on the liquid staking side with our LST, swETH, the LRT side with rswETH that we launched earlier this year, and now our transition into the L2 space.
The reason we are making Swell L2 is because we realised that EigenLayer gives L2’s a way to decentralize and scale the core parts of the infrastructure, whether that is sequencing, verification or finality, which we are collaborating heavily on with AltLayer and EigenDA. As Swell L2 grows and rswETH is bridged, the chain is able to have this intrinsic security layer built into it which allows us to secure and scale the AVS’s powering the chain itself. For example, rswETH will be restaked into AltLayer’s AVS and into EigenDA, so these AVS’s will in some way be secured by the TVL on the chain, which is not possible on any other L2 right now.
Another part of the L2 that we are super bullish on is that a lot of the AVS landscape right now is centred around chain infrastructure. With the introduction of things such as ZK processors, we are excited about the series of dApps that will be using these AVS specific tools to build out faster and innovatively so that you can use this AVS infrastructure.
We have been very selective with the protocols we have partnered with — such as Ambient Finance, Ion Protocol and Brahma — all of which we are looking at integrating with to have them play a core part in the AVS infrastructure backed by the chain itself.
— Abi, Swell
What assets are accepted in Swell L2 pre-launch and what makes them unique?
eETH and weETH are the tokens from EtherFi that you are able to deposit on Swell L2. One of the things we find super important at Etherfi is partnering with good ecosystems such as Swell who we have a great relationship with. With eETH/weETH users can earn 2x Etherfi Points when you deposit on Swell L2.
What Swell is doing in their L2 is super exciting and the reason we partnered with Swell in general is that we want to have an inclusive environment when building this DeFi ecosystem together. Swell does a great job at keeping the user first which is why we have decided to be one of the assets to be brought over to their L2.
— Rok, Etherfi
Eigenpie is the first isolated liquid restaking protocol. Users can restake their asset to get the same token as an LRT which in this case is swETH > mswETH. mswETH is currently the second largest asset restaked on Eigenpie. For the launch of Swell L2, we are really happy to help the Swell and Swell L2 ecosystem by increasing the rewards as well as help increase security on the Ethereum network.
swETH holders who restake their swETH through mswETH can secure extra Pearls and bonus airdrops by depositing it in the L2 Pre-Launch. The mswETH Pearl multiplier increases as more mswETH is deposited starting at a 1.5x base rate and increasing to 2x when 20,000 mswETH is deposited and 3x when 30,000 mswETH is deposited.
— Lew, Eigenpie
AltLayer is a type of infra project where we help projects to build dedicated roll ups and also restaking solutions to help them scale and bootstrap liquidity. Swell is one of our key partners who we started to work with very early on.
Essentially what AltLayer does is combine the restaking mechanism of EigenLayer with our proprietary technology that decentralizes rollups. Most of the rollups today, whether they are an L2, L3 etc, are mostly running with single sequencers, centralized validator pools or no fault proofs. This is a problem that we are keen to solve. We believe that trustlessness is the most valuable asset in the crypto space, and we want to build trustless solutions that allow users to support rollups without any security risk while also participating in staking activities to get staking rewards.
We use proprietary technology to decentralize the sequencer and validator set, combined with zero-knowledge proof and fast finality that allows transactions to be finalized within seconds. Our technology would allow all the rollups that we have built or support to have a decentralized set of node operators that will be running the nodes for sequencers, validators or fast finality. We also combine these node services with EigenLayer’s AVS’s so you don’t need to set up your validator program from day one. By simply outsourcing the staking or node operator part to EigenLayer, you also do not need to vet the validators and manage the mechanisms behind it.
We are working with Swell to help them set up Swell L2, which once live, will be able to decentralize the validator sequencers through the AVS’s we provide, allowing restaked ETH assets to safeguard tier AVS networks rather than having to work with brand new validators and assets in the space.
$ALT is also introduced here in the dual-staking mechanism. Users can deposit their ALT tokens to safeguard the AVS network for Swell. We are anticipating the AVS for Swell to launch in the near future.
— Dorothy, AltLayer
Stakestone is currently running an airdrop carnival and have just recently announced the Wave 1 update. We are also going to announce the retrospective STONE Wave 2 points for users who pre-deposit in Swell L2.
— Ivan, StakeStone
What rewards will users receive for depositing these assets in Swell’s L2 pre-launch?
The rewards that users will receive is highly dependent on the token they deposit.
How it is structured is, if you deposit swETH or rswETH you will continue to earn Voyage Pearls and the Swell L2 rewards, with that same logic applied to every token. In addition to that, Swell has its L2 rewards campaign as a season 2 airdrop. We have also partnered with ecosystem projects such as Ambient Finance, Ion Protocol and Brahma, with more to come, who will also be airdropping to users who have pre-deposited in Swell L2.
— Abi, Swell
Why are you excited about Swell L2 and what it can unlock?
Everything happening right now with restaking and L2’s is really exciting, with some of the narrative around the two having been going for a while and starting to come to reality. It is basically a three sided marketplace happening around EigenLayer with the AVS’s, node operators and the users with ETH. There are a lot of positives for the end user and I am curious to see what direction it goes in.
— Rok, Etherfi
Historically, it has been difficult for alternative L2’s to attract TVL or assets as most users have been reluctant to bridge their ETH to L2’s. The current restaking opportunities changes user behaviour by incentivising them to be more willing to bridge their assets to new L2’s and have those assets sit there accruing value.
A really interesting pattern has taken place this cycle compared to previous ones, where Ethereum has been the one place to store all the value. Now you are seeing other L2’s take away some of that TVL and those assets tend to stay there. It is a very novel experiment to shift user behavior and it just shows that all the capital in the crypto space is easily incentivised.
I think it's pretty obvious that all the AVS’s that are on mainnet right now have huge TVL. People need to now worry about the risk return from delegating and staking activities. In a few months slashing will become a reality and a concern for all the users who have not considered that risk.
— Dorothy, AltLayer
L2’s, LSTs and LRTs will be the driving force for the next bull run. Swell’s approach is very valuable for the launch of Swell L2, because many of the current L2’s lack the utility for their native token besides governance, whereas Swell’s LRT rswETH will have utility on the L2 which is a really unique approach.
— Lew, Eigenpie.
Why will the AVS’s on Swell L2 be more beneficial than externally secured alternatives used elsewhere? The symbiotic relationship is apparent but why does it make it better?
The best way to think about this is that everything in crypto or DeFi in general comes down to cost of capital, whether that's what returns users are looking for, or what returns infrastructure providers demand.
The reason we are so bullish on AVS’s that are native to Swell L2 is because the security that is backing these AVS’s is also participating in DeFi onchain. This is one of the reasons why we believe that LRTs took off so much, because EigenLayer restaking as a whole is an open marketplace for trust which means there's a cost of capital for that trust as well. LRTs allow you to keep providing that trust in EigenLayer whilst allowing you to take that ETH, use it in DeFi and earn yield. This reduces the cost of trust that the token holders demand, and we believe that by launching an L2, we take this to the next level where essentially everything on the chain has a reduced cost of capital. As the TVL of the chain increases, DeFi gets better, and the cost of security is kept in balance.
In most cases users want to hold ETH because it is the second largest and most stable cryptocurrency. By linking the security to a non-volatile token such as rswETH, it reduces the cost of capital because the return that ETH holders and stakers demand is a lot lower than what other chains provide. For us, building an L2 where the security is backed by rswETH, our $SWELL token and also $ALT allows us to diversify the risk profile of the assets which compose the security budget of the chain. Overall this reduces the cost of capital as the volatility of the set is lower compared to just having a single asset. What we are trying to front run for this chain is building the perfect environment for DeFi. This was only possible after EigenLayer was live as it is the way to build programmable security into the base layer of the chain.
— Abi, Swell
Thanks to everyone who attended the event!
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