SwellChain is a non-custodial staking protocol that provides liquid staking and restaking experience in the DeFi world, making DeFi more accessible and guaranteeing the future of Ethereum and restaking services. Swell allows users to earn passive income by staking or restaking ETH to earn both blockchain and restaked AVS rewards, and in exchange, they are given a yield-bearing liquid token (LST or LRT) to store or engage in the larger DeFi ecosystem to earn more yield.

What is SwellChain?

Swellchain is a Layer 2 (L2) network based on the OP stack. The network enhances Ethereum’s security using EigenLayer’s restaking mechanism and Optimism’s dependable infrastructure for rapid transaction processing and scalability. Swellchain is a restacking-focused Layer 2 network based on the OP Stack. The network intends to enhance Ethereum security with EigenLayer restaking, leveraging OP stack-proven architecture for transaction processing and scalability. Swell offers users a non-custodial method of liquid staking and restaking via a transferable ERC-20 token (swETH and rswETH). The protocol intends to give consumers increased yields. Swell allows customers to access staking yields and DeFi chances through a single interface. Users can stake or retake their Ethereum and earn liquid swETH or rswETH to utilize in the larger DeFi ecosystem. The protocol also offers users lower fees. The average ETH staking APY is around 4%, leaving little room for staking providers to charge their fees. Swell charges 10% staking fees, making it one of the most affordable staking choices on the market.

Swellchain aims to provide a scalable and decentralized rollup with infrastructure safeguarded through restaking. By leveraging Ethereum’s security and settlement, Swellchain will be strongly linked with Ethereum and ideally positioned to address the fundamental difficulties other L2s face, such as scarce liquidity, centralization, and a lack of native yield. This goal will be realized through Proof of Restake, a novel technique that utilizes Swell’s liquid restaked assets to protect both Eigenlayer AVS and Symbiotic Networks, which provide critical infrastructure and services to the blockchain, propelling value creation for restakers to unprecedented heights. Swellchain is part of the Superchain, a network of blockchains powered by Optimism’s OP Stack collaborating to scale Ethereum. In addition to Optimism, Swellchain is launched with the backing of the prominent participants in the restaking ecosystem: Etherfi, Renzo, and Kelp, as well as Ethena and restaking platforms EigenLayer and Symbiotic, all of which are backed by RedStone price feeds.

Source: Swellchain.io

Background of SwellChain

Swellchain, the restaking chain based on Proof of Restake, was formally launched in December 2024. Daniel Dizon founded Swell Network, the entity behind Swellchain. While the facts of Swellchain’s founding team are not well documented, co-founders David Singleton and Hugo are known to be part of the core team. Swellchain launched after a successful pre-launch campaign. It received over $1 billion in deposits from prominent restaking protocols such as Swell, Etherfi, and Renzo. This strong support established Swellchain as a well-known hub for restaked assets in the Ethereum ecosystem. As of March 26, 2025, Swellchain’s Total Value Locked (TVL) was roughly $292 million, with a user base of over 37,700. SWELL, the network’s native token, is vital to its ecosystem, providing incentives for early adopters and liquidity providers. Strategic alliances with essential players in the restaking and blockchain industries have aided Swellchain’s growth. Collaborations with platforms like Ethena, EtherFi, EigenLayer, Symbiotic, Renzo, and Kelp have helped drive its growth and popularity.

Technical Architecture

Swellchain deploys three vertically integrated AltLayer Actively Validated Services (AVSs) that collaborate to deliver security and performance. MACH AVS offers faster finality and cross-rollup compatibility, with transaction confirmation in under 10 seconds compared to Ethereum’s ~13-minute finality. This permits more efficient bridge operations and MEV mitigation. VITAL AVS conducts state verification via fraud or ZK proofs, while permissionless verification nodes provide L1-level security assurances. The service offers high availability while allowing community engagement via staking. SQUAD AVS decentralizes the sequencing layer by distributing transaction ordering among several nodes. This avoids single points of failure and allows for community participation via sequencer staking, all while ensuring censorship resistance. These services use EigenLayer’s restaking method to provide shared security throughout the network while preserving decentralization and performance.

MACH

To solve the sluggish finality of rollups, we provide MACH, a fast finality layer for Ethereum rollups, with the following key requirements:

• Fast confirmation for rollup transactions.
• Cryptoeconomic security is used to address any malicious network members.
• Supports both ZK and hopeful rollups.
• Generic enough to accommodate several proof systems and runtimes.

To ensure finality, MACH, as a network, must validate the validity of a rollup state to ensure that the rollup operators correctly execute the state transition function. To this goal, MACH provides three state validity modes.

Pessimistic Mode

In the pessimistic mode, each transaction is automatically considered invalid and must be replayed. As a result, the rollup operator sends transaction data straight to the MACH network, which then re-executes the transaction and agrees on the validity of the state suggested by the rollup operator.

While this operating mode is the simplest, one of its key drawbacks is its inefficiency. MACH effectively runs as a network of complete nodes during the rollup. This leads to high node requirements. This mode will focus on developing stateless clients that require a smaller state footprint to operate a rollup node.

Optimistic mode

In this mode, the rollup operator makes a state claim on MACH, claiming to execute a given block of transactions, which results in a specified state commitment. Any node in the MACH network can then challenge the claim and demonstrate that the new state is invalid by interacting with the rollup operator using a bisection protocol. This is the classical optimistic mode, as depicted in the diagram below.

It should be noted that the bisection process is only used when a challenger feels the state commitment is invalid. Alternatively, the bisection process could be replaced by on-demand ZK proofs, in which the ZK proof is generated only when there is a challenge. This is seen in the diagram below.

This configuration presupposes the presence of at least one honest node in the MACH network, with network nodes primarily in observation mode.

Validity Proof Mode

The MACH network is a decentralized verifier network for valid proofs in this mode. The rollup operator, such as a sequencer, will commit to a new set of transactions, the resulting state, and the validation proof on MACH. The MACH network will check and agree on the veracity of the evidence next.

Despite the explicit use of validity proofs, this method is also effective with optimistic rollups. With optimistic rollups, any designated prover with the correct motivation (outside of MACH) can construct a proof of validity and submit it to the MACH network, which then checks and agrees on the validity of the evidence. Note that for ZK rollups, the prover can generate and submit proofs more often on MACH than on Ethereum, which is critical for speedier finality. Furthermore, this does not have to come at the expense of additional proving work: Instead of waiting for a single batch proof, the prover can generate proofs in real time, submit them to MACH, and then use recursion to aggregate them into a batch proof that can be sent to Ethereum. Transactions will be finalized quickly if incremental proofs are given immediately to MACH.

VITAL

VITAL serves as an established verification layer for rollups. It comprises a network of AVS-registered operators who check all new states presented by SQUAD operators. Vital operators identify invalid state roots and can challenge SQUAD operators in a bisection process.

VITAL can also use optimistic ZK proofs. Vital operators require SQUAD operators to generate a ZK proof for a contested state root rather than engaging in a bisection technique. Another operating mode is to check intermediate proofs that do not require an L1. Vital is essential because the Mach AVS uses it to offer a rapid finality layer.

VITAL is a network of operators that verify a new state. Unlike rollup sequencers, the VITAL provides far greater confirmation because of the underlying economic support. This permits assets to be withdrawn instantly.

Tier-1 Finality

These networks use a centralized sequencer, which accepts a user’s transaction, processes it, and generates a transaction receipt as proof of soft finality. It should be noted that this transaction could come straight to the sequencer or from the L1 (where there is a withdrawal request from Layer 2 to Layer 1). On the other hand, because AltLayer rollups use decentralized sequencers via SQUAD and can potentially run a consensus protocol amongst themselves, the soft finality guarantee here is slightly “harder” than the corresponding guarantee at the same level from rollups with centralized sequencers.

Tier 2 Finality

In most rollups, after 1-3 minutes, the sequencer batches the transactions performed thus far. It pushes them to the underlying Layer 1 using calldata, which essentially remains in on-chain storage but is not part of Layer 1’s global account state and cannot be retrieved by other contracts. The Layer 2 transaction now has the same finality as the Layer 1 block that contained it in a batch, which is known as “hard finality.”

In addition to transaction data, the sequencer submits old (state before the batched transactions) and new (state after the batched operations are run) state roots to demonstrate the correctness of state changes. When the sequencer sends the batch, the contract confirms that the pre-state root matches the current state root. If the two match, the contract discards the old state root and keeps the new state root offered by the sequencer.

Tier 3 Finality

At this point, the transaction data and the new state are committed to Layer 1. The rollup system is now undergoing a challenging period. Suppose a proposed state commitment remains uncontested for the challenge period. In that case, it is regarded as final, and smart contracts on Layer 1 can safely accept withdrawal proofs of the rollup’s state based on that commitment. If a state commitment is successfully challenged, the invalid batch and subsequent batches will be reverted, returning the rollup to its previous state root. The rollup protocol must then re-execute the transactions and update the rollup’s state appropriately.

SQUAD for Decentralized Sequencing

The sequencer is a key component of any rollup. Sequencers are nodes in the rollup network that perform the following rollup operations:

• Aggregate transactions: Accept transactions from end users using a mempool.
• Order transactions: Choose transactions from the mempool and sort them according to some rules.
• Execute transactions: In most rollups, the sequencer is also responsible for executing transactions by the underlying VM.
• Pre-confirmation: Because finality for a rollup transaction eventually comes from the underlying Layer 1, sequencers frequently generate pre-confirmation for a user transaction, allowing clients and applications to proceed while waiting for finality from Layer 1.
• Send the ordered transaction data to the DA layer: In the final phase, the sequencer commits the sorted transaction data to a DA layer, such as the underlying Layer 1. Once uploaded to Layer 1, transactions have Layer 1 finality.

Sequencers serve as the heart of a rollup. When a sequencer fails, the network remains operational because users can instead submit their Layer 2 transactions directly to Layer 1. However, these transactions can take up to 24 hours to be considered final. They will incur the same fees as the underlying Layer 1, resulting in a bad user experience. In addition, a 24-hour delay may not be optimal for time-sensitive activities such as debt liquidation.

What is SWELL Token?

The SWELL token is the native governance token for Swell Network, a decentralized liquid staking protocol based on Ethereum. SWELL enables holders to influence Swell DAO governance choices such as protocol development, ecosystem incentives, and node operator selection.

Governance

SWELL token holders are the foundation of Swell’s decentralized governance structure. As part of a community-driven protocol, SWELL holders can influence crucial choices, ensuring that the Swell ecosystem evolves by its users’ shared vision. This decentralized governance architecture gives the community power while ensuring that the Swell protocol is constantly adjusted for development and security. Voting on governance proposals occurs on the off-chain Snapshot platform, providing a transparent and speedy voting procedure. The more SWELL tokens a user owns, the more votes they have. However, Swell is intended to foster widespread engagement and connect with community objectives. Beyond governance, SWELL is critical to safeguarding the Swell protocol by serving as a governance token for protocols such as EigenLayer. SWELL, in particular, can be restaked alongside other assets such as rswETH and swBTC to improve the cryptoeconomic security of SWELL’s Layer 2 infrastructure services (AVSs).

Tokenomics

The initial circulating supply will be up to 13% (1,300,000,000), rounded to the nearest whole percentage, including the Voyage airdrop (8.5%) and market makers, exchange marketing, and early DEX liquidity. SWELL’s maximum total supply is 10,000,000,000. The supply of SWELL is distributed as follows:

• Community: (35%, 3,500,000,000 $SWELL)
• Team: (25%, 2,500,000,000 $SWELL)
• Fundraising: 25% (2,500,000,000 $SWELL)
• Foundation: 15% (1,500,000,000 $SWELL)

Other SwellChain Tokens and Staking

SwETH Token

SwETH is an ERC-20 token that reflects a user’s staked ETH on the Ethereum blockchain, including any accumulated rewards and penalties from the consensus layer and MEV and ‘tips’ from the execution layer. The number of swETH kept will remain constant over time. However, the underlying value of the token will increase as rewards accrue on the chain. The benefits will be realized only when the token is exchanged on the secondary market (i.e., at a decentralized exchange) or withdrawals are permitted in the primary market following the Ethereum Shanghai upgrade. This is generally referred to as a reward-bearing token, and its underlying worth is recorded using an exchange rate.

When a user stakes their ETH in the Swell swETH contract, the ETH equivalent in Swell’s liquid staking token swETH is issued to the user. The ETH from the swETH contract is transmitted to the deposit management contract and pooled until enough for at least a 32 ETH deposit. Round robin determines the next validator(s) in the registry contract, and a deposit is made into the Ethereum deposit contract using the validator key(s). The validator is then queued to be activated in the consensus layer, allowing the node operator to begin attesting transactions and proposing blocks.

rswETH Token

rswETH is an ERC-20 Liquid Restaking Token that provides liquidity to users who want to “restake” their ETH in restaking protocols like EigenLayer without having their restaked ETH locked. It is a repricing token that reflects a user’s yield-bearing ETH, and validators utilize it to verify transactions on the Ethereum network. The first version of rswETH follows the existing implementation of the EigenLayer restaking protocol and is primarily a direct fork of the swETH collection of smart contracts. This implementation of the EigenLayer mainnet only allows for deposits and withdrawals; however, it also rewards ‘restakers’ with off-chain EigenLayer points.

The remaining deposit manager operates as the EigenPod owner and communicates with the EigenPod manager to:

• Create the EigenPod and check the withdrawal credentials.
• Stake 32 ETH with deposit data on the Beacon Chain.
• Returns prizes from the EigenPod to the restaking pool.

swBTC Token

SwBTC is a yield-bearing ERC-20 liquid restaking token that provides liquidity to customers who want to stake their WBTC in protocols such as Symbiotic, EigenLayer, or Karak without locking up their WBTC. SwBTC enables holders to receive native yield from restaking platforms while using swBTC throughout the DeFi ecosystem. It can be used as collateral in lending and borrowing protocols, decentralized exchanges, options platforms, and other applications. Yield is obtained using the collateral asset (WBTC) as economic security for networks using restaking protocols such as Symbiotic, Karak, and EigenLayer. These networks compensate for the economic security, resulting in a yield for SWBTC holders.

rSWELL Token

rSWELL is a yield-bearing ERC-20 token that provides liquidity for SWELL token holders who want to earn restaking yield using restaking protocols like Symbiotic and EigenLayer while retaining their governance voting rights. RSWELL holders can also earn Ecosystem Points by depositing their tokens into the Swell L2 pre-deposit. The rSWELL vault is built on Yearn v3, which has been extensively battle-tested since its release in 2022. Nethermind and ChainSecurity conducted an audit of Swell’s vault changes.

Conclusion

Swellchain, a Layer 2 blockchain based on the Optimism (OP) stack, was launched in December 2024. It uses a novel proof-of-restake mechanism to improve Ethereum’s scalability and security. The network uses restaked assets to provide a decentralized alternative for Ethereum scaling, addressing issues like liquidity scarcity and centralization in typical Layer 2 systems. Swellchain delivers scalable, decentralized Ethereum solutions, establishing itself as a key player in the emerging restaking ecosystem.