Swell: Introducing Voyage 2

October 12, 2023

In conclusion

Greetings to all, especially my LSD enjoyooors out there. 

It’s been a couple of months now since we introduced you to Swell so we hope you took advantage and have been enjoying those juicy yields. 

If you haven’t, then don’t worry, there’s still time.

If you paid attention to what we were saying, then you were probably early to Swell’s first Voyage and have already got yourself some pearls in the bank. 

Swell’s Voyage 1 campaign was a tremendous success, to say the least. Swell attracted 48,000+ ETH staked on the platform catapulting them to the top 10 LSD protocols in the market. The platform also has over 10.3k active stakers and 1,486 validators. Absolutely insane numbers.

Today, we’re going to show you how you can earn some more pearls through their Voyage 2 campaign. 

Enough chit-chat, let’s get straight into the alpha. 

Voyage 2 

The hallmark feature of this Voyage is their Zap feature which will be available over a 14-day period. 

But wtf is a Zap? 

Put simply, you can select any ERC-20 token of your liking and convert it into swETH (in this case) in one single operation. 

Each swETH you zap into earns you 40 pearls, and over this 15-day period, you can ‘zap’ into swETH as many times as you want to earn yourself some rewards. But keep note that looping is strictly prohibited. 

The process is fairly simple:

  1. Head over to the Swell App
  2. Navigate to the Zap feature 
  3. Select the token you want to swap 
  4. Confirm Zap!

For the best possible price execution, Swell has partnered with Li.Fi and all zaps will be routed through there.

Whether you have LDO tokens or DonkeyDickObamaSonic69inu tokens, you can zap them into swETH to earn you some pearls. 

But here’s an added kicker. Aside from the 40 pearls you get per swETH zapped, there are also some bonuses.

  1. 500 pearls for the most obscure Zap

If your wallet is anything like mine, you probably have a ton of coins just sat there collecting dust. Most of which you have long forgotten about. As much as I hate to remind you of your horrible investment decisions, there are 500 pearls on the line. 

The person who zaps the most obscure mix of tokens can win 500 pearls which will be awarded at the end of this sidequest. 

The winner will be decided by a panel of community mods and Swell key contributors. 

  1. 10 extra pearls for large Zaps

If you’re a big money baller unlike myself, you can get a 10-pearl bonus for Zaps above 100 swETH at once. This bonus is only available until a total of 15k swETH is zapped. 

But of course, there have to be some checks and balances in place to make sure this campaign is not gamed. 

  • During this time, staking will be disabled and referrals will be paused. But, you can still earn pearls as normal through LP’ing and holding 
  • As mentioned earlier, looping is strictly prohibited. Anyone caught looping will be immediately excluded from the Voayge and lose entitlement to their pearls. 

After this 15-day period, referrals may potentially be restarted and you can earn even more pearls by referring your friends. 

You simply create your own unique referral link over here and for every 1 swETH minted, the referrer and the referee both get 10 pearls each.

Once Voyage 2 ends, the entire early adopter campaign will come to an end. We will be arriving in Swell City where users can redeem their pearls for $SWELL tokens. 

The current forecast for the Token Generation Event (TGE) is late Q4. 

Swell vs. The Rest 

The race to win the battle of the LSDs is fierce. Everyone understands the potential of this sector which is why the protocols understand what it would mean to be one of the top players in this sector. 

Over the past few months, we have seen a bunch of LSD protocols take many different approaches to attracting liquidity. Swell has been among the most unique in terms of onboarding approach. 

Now that the TGE is just around the corner and the voyage phase is nearing an end, the best way to gauge Swell's future potential is to compare its strategy to some of the other players in the field. 

Lido vs Swell 

Let’s start off with the king of LSDs (king of DeFi, too). 

Lido didn’t really do anything special in particular in terms of onboarding. They were simply pioneers in their field. They championed the idea of LSDs and built out their product much earlier than anyone else. 

Naturally, once PoS went live on Ethereum, many people chose to stake their ETH with Lido because there is no minimum requirement, you get a good yield, and you can use that stETH in some parts of DeFi. 

The result was Lido having 186.3K unique depositors leading them to control 32.3% of the ETH stake. With a rapidly growing TVL. 

If some of you are avid enjoyooors of our lord Vitalik's blog, then you may have seen him write multiple times about how one entity controlling 33% of the ETH stake poses major security risks to the network as a whole. 

Due to this, you see competitors such as Swell coming in to chip away at that market share. So let’s see how Swell compares to the second largest player in this sector. 

Rocket Pool vs Swell 

Rocket Pool is in a similar situation to Lido. They launched shortly after Lido and were their only real competitor for a very long time. 

Unlike Swell, Rocket Pool also did not have any elaborate airdrop or social campaign. They simply emerged as a Lido competitor, differentiated themselves from a technical standpoint and grew a community around that. 

Their whole differentiator was to focus on being permissionless and trustless to maximize decentralization. 

The result was they currently have around 220K ETH deposited with the protocol and over 1,500 active nodes. However, they could still only be second. Lido’s dominance still remains untouched. This opened the door for even more competitors. 

frxETH vs Swell

Frax has been in DeFi for a while and has its toes dipped in pretty much every sector within DeFi, so it’s only natural that they join the LSD race as well. 

Frax took a different approach to growing their LSD. They focused on something that DeFi degens care the most about – yield. 

Rather than offering a regular yield like most protocols, Frax divided their LSD product into frxETH and sfrxETH. frxETH is more like a wrapped version of ETH which people can deposit into the frxETH-ETH pool on Curve for example to earn yield, while sfrxETH is more like a yearn vault that increases in price as staking yield accrues. This combined with the pre-existing infrastructure in the Frax ecosystem allows Frax to offer some of the highest LSD yield. 

Swell recognized that they don’t have the same infrastructure in place as Frax to offer the same amount of yield, therefore, they targeted something else that DeFi degens love. Airdrops.

The entire voyage campaign was an onboarding process for users to collect pearls which can eventually be claimed for SWELL tokens. This was coupled with their strong array of partnerships which allowed users to earn additional yield through other platforms. In addition, Swell offered very competitive yields on swETH. 

All of this combined allowed Swell to attract over 47K ETH to the platform. 

So What’s Next? 

I know what most of you may be thinking.

There’s been a ton of protocols that have gone with the airdrop onboarding strategy and they all turn out the same. It gets initial traction as users farm the airdrop and then it eventually dies out once the airdrop is claimed and dumped. 

I’m here to tell you that this time is indeed different, anon. 

For starters, LSD as a sector is not one of your average yield ponzi games that’s here for a month or two and then suddenly disappears. As crypto and DeFi grow, LSDs will be at the forefront of that growth. 

Naturally, as a sector grows, the stronger up-and-coming players such as Swell will also grow with this overall growth. 

But even if the sector as a whole grows, what makes Swell stand out? Why would they not get eaten up by existing market leaders? 

Well the answer is simple, you didn’t think that their only strategy for growth was just an airdrop campaign, right? The airdrop is simply phase 1 to onboard as many people as possible. After this, there is only one thing that will keep people around… yield. 

Now that Swell’s staking yield is on par with the rest of the LSD market, how do they stand out with a point of difference? The answer is partnerships & integrations. Swell has already partnered with a plethora of projects such as Aura, Alchemix, Pendle, and many more to create products that use swETH. These products can then allow users to generate additional yield on their swETH. 

If that’s not enough, Swell will also be making their own vaults which gives additional earning potential for holders of swETH. Therefore, indirectly, swETH holders could potentially outperform holders of other LSDs which may not have as many earning opportunities. 

But if simply yield is not enough to convince you, then you may remember that in our intro article, we spoke about swETH being a reward-bearing token. So if Alex buys 1 swETH with a 5% reward rate. At the end of the year, theoretically, he will still have only 1 swETH which would’ve appreciated in price allowing him to sell that 1 swETH for 1.05 ETH. 

Rebasing tokens, which are more popular, work as such. If Bob gets 1 stETH at the same 5% reward rate. At the end of the year, he will have 1.05 stETH which can be redeemed for 1.05 ETH. 

The difference here is that reward-bearing tokens significantly reduce a user's tax implications (of course dependent on region). You know the old adage, money saved is money earned. So over the additional yield opportunities, Swell also saves you some money.

All of this coupled with one of the most sleek and easy-to-use UIs makes Swell a serious challenger in this field. 

Concluding thoughts 

Before ending this, I would like to clarify that we did leave out some players from the above comparison. We left out centralized players such as Coinbase and Binance because they operate differently from the decentralized players. 

When it comes to the decentralized players, we only mentioned the larger players and left out some notable protocols like Ankr because their approach isn’t too different from the others and we don’t want this article to drag on for 50 pages. 

With that being said, our overarching point still remains. Swell is a serious player in this space and is likely to grow even more. In a sector that needs some disruption, Swell is poised to provide that much-needed challenge to the likes of Lido. 

We hope you kept up with us and collected those sweet pearls and hopefully, you continue to refer to your friends to earn more pearls. 

Don’t fade this one anon, and keep your eyes peeled for that much anticipated TGE.

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