Swell Network is an ETH liquid staking protocol that allows users to stake ETH and earn swETH along with DeFi yields. Swell L2 is a restaking yield layer that ensures the security of infrastructure through restaking, overcoming the challenges faced by existing L2s. Proof of Restake (PoR) is the core mechanism of Swell, maximizing the utility of staked assets and capital efficiency yields. Swell L2 integrates PoR to create a vertically integrated and secure ecosystem. Through staked assets, on-chain activities, and yield accumulation, liquidity is deepened and security is enhanced. The structure of Proof of Restake makes Swell L2 the best choice for builders, node operators, and users, promoting DeFi innovation and the scalability of Ethereum.

SWELL

<div>This article is provided by a third party and does not represent the views of Wu Shuo.Swell Network is an ETH liquid staking protocol built for stakers, node operators, and the Ethereum ecosystem. Users can stake ETH to earn swETH and gain DeFi yields. The project was established in 2011 and completed a $3.75 million financing round in March 2022, with DefilLama showing its current TVL at $1.42 billion.Swell L2 serves as a restaking yield layer that ensures the security of its infrastructure through restaking, achieving scalability and decentralization.This mechanism enables the network to overcome key challenges faced by existing L2s, including liquidity scarcity, centralization, and lack of native yields, thereby pushing value creation to new heights.At the core of this network architecture is an innovative mechanism: Proof of Restake (PoR).Users can gain early access by depositing into the new <a target="_blank">earnETH</a> vault, during which they can earn DeFi yields and Swell L2 rewards simultaneously.Introducing Proof of Restake (PoR)Swell's Proof of Restake aims to maximize the utility of staked assets both within and outside the Swell L2 ecosystem. This mechanism utilizes liquid restaked assets to secure the infrastructure that provides critical services for rollups, thus ensuring the chain's security.This mechanism maximizes the utility of staked assets and capital efficiency, allowing the user community to directly benefit from on-chain value creation while initiating a flywheel effect that drives network growth, enhances security, and expands liquidity across the ecosystem.Proof of Restake in ActionSwell L2 integrates PoR to create a vertically integrated and secure ecosystem where staked assets can be reused efficiently across multiple layers and chains, ensuring that the incentives for all network participants (including validators, node operators, developers, and users) are aligned.The Flywheel Effect of Proof of Restake<div><img src='https://sosovalue.s3.us-west-2.amazonaws.com/sosovalue/2024/10/17/9fb52ae6-3aaf-497a-b240-ed70349f992c.png'/><div><input/></div><div><div>Edit</div></div><component-cursor>​</component-cursor></div>The growth of Swell L2 enhances security, deepens liquidity, and rewards participants.1. Stakers deposit assets.Assets staked in Swell are tokenized into liquid restake tokens (LRTs). These tokens can still be used for infrastructure services, DeFi applications, and cross-chain protocol deployments while accumulating staking rewards. Thus, stakers can participate in the ecosystem while ensuring the security of Swell's infrastructure.2. On-chain activities generate revenue for network infrastructure and services.Restaked assets secure critical infrastructure services within the Swell L2 ecosystem, including validators, relayers, node operators, and sequencers that maintain the integrity and functionality of the network. These services support network operations and charge fees.3. Revenues accumulate to Swell assets.Revenue generated by chain-specific AVS infrastructure from transaction fees, sequencer fees, etc., is passed down layer by layer to become native restaking rewards for Swell asset holders.4. Liquidity deepens and security increases.As more assets are deposited and network activity increases, dApps benefit from enhanced crypto-economic security and deeper liquidity, creating a better DeFi environment that attracts more developers and users.Structure of the Restaking Yield LayerWhy choose Proof of Restake?Integrating PoR gives Swell L2 the necessary characteristics to address the issues faced by existing L2s, providing the best experience for builders, node operators, and users.ModularBy completing each network function through modular and interchangeable AVS and networks, Swell L2's core infrastructure can be adjusted and upgraded, allowing the network to gradually achieve more decentralization and performance optimization over time while remaining streamlined and flexible.Aligned with EthereumRestaked assets are used to secure the critical infrastructure components within the network, ensuring they are firmly rooted in Ethereum's security. This helps avoid many issues associated with using centralized infrastructure (such as sequencers), including censorship, single points of failure, and downtime.Maximizing Asset ProductivityProof of Restake allows Swell L2 users to be direct beneficiaries of the value created by their activities.The income generated through network activities (such as transaction fees, sequencer fees, etc.) is layered and becomes the native restake rewards for Swell asset holders. In this way, Proof of Restake (PoR) enables users to maximize asset productivity while still contributing to the long-term growth and sustainability of the network.More DeFi InnovationsBy building on liquid restake assets, dApps can access new sources of liquidity that are locked in traditional staking mechanisms. Additionally, dApps on Swell L2 can innovate by accessing infrastructure services, including Zk co-processors, decentralized automation, and security protocols, which make it possible to innovate beyond EVM constraints while still being firmly rooted in Ethereum's security.Beyond Swell L2Rollups are being developed based on a shared technology stack to form clusters. Proof of Restake supports a new approach where these interconnected rollups can inherit the security of other chains within the broader network. By delegating consensus to Ethereum and parallelizing the creation of block value into a dedicated network backed by a shared group of Swell assets, blockspace is expanded. This lowers the barrier to entry for new chains, with each new dedicated rollup joining a rollup system backed by the same group of strong assets, while shared decentralized infrastructure services handle ordering, validation, and finality requirements, benefiting from the merged native restake rewards. In this way, Proof of Restake facilitates the proliferation of a series of rollups at the forefront of Ethereum scalability.

Understanding the Proof of Restake Mechanism of Swell L2