Swell Network, a permissionless, non-custodial, and liquid ETH staking protocol, has integrated Chainlink Price Feeds on Ethereum.
Swell Network is also “integrating Chainlink Proof of Reserve to help ensure that its liquid staking receipt token (LSRT) – Swell ETH (swETH) – is always fully backed by staked ETH on a 1:1 basis.”
Chainlink Proof of Reserve “uses automated verification based on cryptographic truth to enable the reliable and timely monitoring of off-chain or cross-chain reserves.” By providing on-chain proof that reserves are fully backed, developers “are better able to protect against malicious actors and ensure the solvency of the protocol.”
Swell is “an innovative multi-sided staking platform serving both stakers and node operators.”
Through a range of innovations, including the Atomic Deposit, Swell Financial NFTs (swNFTs) and Swell Vaults, the protocol will “offer Ethereum stakers higher yields, a better user experience, the ability to choose their node operator, and complete transparency for each and every deposit on the platform.”
Ultimately, Swell aims “to make a positive contribution to the Ethereum ecosystem by driving integration with new technologies like Chainlink Proof of Reserve, which is likely to become the standard auditing solution for more and more liquid staking protocols and other decentralized finance (DeFi) primitives.”
Swell chose “to integrate the ETH/USD Price Feed across the DApp to promote improved decision-making around staking ETH.”
For example, Chainlink’s Price Feeds “help Swell to calculate the estimated gas costs of a transaction in USD terms.” This enables users “to quickly evaluate the fees and make transactions at opportune times, such as when there’s less network activity and gas costs are lower.”
By relying on Chainlink’s time-tested and cutting-edge oracle network, Swell can “leverage the highly accurate, reliable, and decentralized market data it provides DeFi protocols with even during high network volatility or flash crashes.”
Chainlink Price Feeds provides an array of benefits such as:
- High quality data — Data is sourced from numerous premium data aggregators like BraveNewCoin and Kaiko, leading to volume-adjusted global market prices with robust market coverage.
- Reliable nodes — Price feeds are secured by a decentralized network of independent, security-reviewed, Sybil-resistant oracle nodes run by leading blockchain DevOps teams with a proven history of hyper-reliability.
- Decentralized infrastructure — Both the data sourcing and transmission on-chain are decentralized, removing any central point of failure.
When users stake ETH with Swell, they “receive swETH, which represents a claim on the underlying ETH staked on the Beacon Chain.”
The design for the token “is unique in that for each swETH token minted, there is provable 1:1 backing with staked ETH on the Beacon Chain.”
This is “achieved by directly integrating Chainlink Proof of Reserve directly into Swell’s smart contract so that the protocol can continue to maintain parity and redeemability in a fully-automated manner.”
Chainlink Proof of Reserve “provides users with on-chain proof regarding the collateralization of on-chain assets by comparing the asset’s current supply to the reserves backing it.”
The protocol must “hold sufficient staked ETH as verified by Chainlink Proof of Reserve. Ultimately by minting swETH on the Swell Network in a secure manner, users can create liquidity for staked ETH and unlock capital on the network.”
Some of the main benefits of using Chainlink Proof of Reserve include:
- Automated on-chain audits — By keeping an up-to-date reference contract, smart contracts can get automated, on-chain verification of an asset’s collateralization, removing the need to conduct manual audits.
- High quality data — Through the use of customizable External Adapters, Chainlink can source data from premium data providers who are financially incentivized to provide highly accurate and available data.
- Decentralized — Chainlink Proof of Reserve Feeds are decentralized at the data source and oracle node level, eliminating central points of failure in the sourcing and delivery of external data to Swell Network.
- Transparent — Chainlink Proof of Reserve Feeds can be monitored by anyone in real-time, allowing any user to independently verify asset collateralization.
Daniel Dizon, Co-Founder and CEO of Swell Network, said:
“Swell Network is committed to driving next-level transparency to the Ethereum liquid staking market by integrating Chainlink Proof of Reserve. Embedding powerful and automated on-chain verification is core to our design philosophy of being open, auditable, and provably 100% asset-backed for our liquid staking receipt token, swETH.”
Dizon continued:
“Chainlink’s best-in-class offering will serve to provide further reassurance for Swell’s stakers around the provable redeemability of swETH, which by design, represents ETH staked on the Beacon Chain on a 1:1 basis. This marks a significant step forward in our integration of Chainlink services, where Swell is already utilizing Price Feeds across our existing DApp to bring the next generation of staking to Ethereum holders everywhere.”
Tomasz Wojewoda, Head of Global Sales at Chainlink Labs, said:
“We’re pleased to see Swell Network using Chainlink Price Feeds and Chainlink Proof of Reserve to secure its permissionless, non-custodial, and liquid ETH staking protocol. Chainlink Proof of Reserve will help ensure that the protocol remains sufficiently collateralized, while Chainlink Price Feeds provide access to highly accurate, reliable, and decentralized market data.”