Swell launches swNFT to reward investors

Swell launches swNFT to reward investors
Swell launches swNFT to reward investors

Swell Network is making positive steps in the post-Merge era. Recently, Swell incorporated a Distributed Validator Technology (DVT) that has made it the first liquid staking platform. According to reports, the technology comes with a “capital-efficient, permissionless entry into its validator set.”

This implies that the protocol provides options to incorporate atomic deposits. This deposit allows investors to deposit ETH to their preferred validator seamlessly. Thus, imposing a defacto staking marketplace status on the platform. To carry out this function, it uses swNFT and swETH to remove deposits in ETH from the staking Yield.

Swell, Swell launches swNFT to reward investors
Atomic Deposit model. Source: Swell

Swell adopted the mechanism because Stakes are not fungible by nature. This is because they are tied to a particular validator through Swell instead of the general staking pool that consists of numerous validators. Further, Swell substitutes swETH and swNFT for deposited stakes to reward investors.

Notably, swETH is an ERC-20 liquid staking derivative token that depicts prevalent stakes. The swETH is a non-rebasing coin the users hold within the swNFT.

However, investors can deploy swETH on numerous DeFi platforms, but its withdrawal won’t be available during the guarded launch. This indicates that the swETH coin cannot be withdrawn from swNFT. For their effort, validators get a non-transferable swNFT that stands as their collateral.

Swell, Swell launches swNFT to reward investors
Reward Chain. Source: Swell

The swNFT is like a receptacle for swETH. It holds non-fungible details about stakes, and it retains yields.

These details include the delegated node operator, address, and the timestamp of the staked deposit. The relationship between the two is somewhat related. To receive rewards, investors must burn swNFT alongside the actual value of the swETH deposited.

Side notes and notable opinions about Swell

Swell runs as a “permissionless, non-custodial, decentralized liquid staking solution.”

It reportedly avails its liquid stakers with a 1:1 staked ETH token, swETH. Beyond this token, Swell also offers its financial NFT, swNFT, to stakers. However, according to findings, the swETH offered by the protocol is not interest-oriented but functions as a receipt for the ETH staked by users in the ETH2 contract.

Highlighting the prospects of Swell to stakers, David Angliss, an analyst with Apollo Capital, a cryptocurrency investment firm, hinted that the solution avails a “more engaging and user-friendly experience through Swell ETH and NFTs.”

Angliss maintained that a normal “permissionless validator node operation usually costs at least 32 ETH. However, the analyst added that Swell only requires 15 ETH throughout the staking duration.

Additionally, Angliss said Apollo Capital sees Swell as an integral Ethereum 2.0. He maintained that the solutions and services developed by Swell help to enhance the security and consensus of Ethereum POS.

This, according to him, encouraged Apollo to participate in its network liquidity round, which raised about $5 million. As reported, the round paves the way for stakers to pledge ETH with the protocol.

Swell, Swell launches swNFT to reward investors

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