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To celebrate swETH joining the safETH index, Swell Founder Daniel, was joined by Hannah and Justin from Asymmetry Finance to discuss the recent integration.
In case you missed it, here are the top questions from the event:
Why did Asymmetry Finance choose to onboard swETH to safETH?
Justin: The main reason we chose to onboard Swell was because we saw that they understood the need for another liquid staking provider that is as simple and easy to use as possible. Two of our principles at Asymmetry Finance are making staking as simple as possible for users, and spreading that staked ETH over a wide validator set. Swell hits the mark here, so it was important to get a partnership in the works as soon as we could.
How do indexes such as Asymmetry Finance’s safETH play into the development of swETH?
Daniel: There is a highly synergistic relationship between receipt tokens or LSTs, such as swETH, with liquid staking indexes. We are still in the early stage of LST ecosystem development, but as we see more capital inflows and a tremendous surge post Shapella with more ETH staking coming through, I would expect to see more value being created and more indexing as a result for users to get exposure to certain things.
It is great to see this being pioneered by Asymmetry with a product that enables exposure to a basket of LSTs. This will increase diversity in the ecosystem, optimize gas costs, simplify user experience and most importantly — provide a compelling offer for users that drives decentralization whilst aligning with Ethereum’s values.
Hannah: I believe that indices offer unique opportunities for partners like Swell to help scale and drive TVL by opening the door and lowering the barrier for entry so that more LSTs can enter the market. There is a lot of conversation in the Ethereum staking space at the moment about a single protocol that controls a large margin of the market, and there is clearly a need for more competition. This makes it better for all users as we continue to innovate the space.
What do you believe is the downside of centralization in the LST market, and how can we mitigate it?
Justin: The LST market as we know it is just getting started, as products find market fit and the validator set expands. At the end of the day the goal of this activity is to increase the security of Ethereum, and the best way to do that is by spreading staked ETH over a wide validator set. Swell has done a great job of doing this by bringing users into the liquid staking space, and it has been incredible to see their explosive growth so far.
Daniel: Centralization calls into question the value of economic security the blockchain provides, and comes in many different dimensions – whether it be the validator set, geographies, corporate set up, smart contracts or governance capture. Ethereum has largely de-risked a lot of this in its early stage, but it is still something that users still need to be conscious and mindful of. Although there is definitely some centralization in the current iteration, I am optimistic that the competitive market and social layer will drive us to a more decentralized future.
Where do you see Asymmetry sitting in the liquid staking index market?
Justin: The role of indices in the liquid staking market is to do the same thing that they do in traditional markets, which is to provide users with a way to gain access and exposure to an entire sector without having to be an expert, which is what our safETH indexes are designed to be. This also addresses centralization, as we are trying to spread ETH out over as many LSTs as possible and Swell has been a great partner to do that with.
Thanks to everyone for attending this Twitter Space.
