Swell AMA: Maximizing Your ETH Yield Post-Shanghai

Foreign [Music] [Music] Foreign And welcome to cointelegraph's AMA live I'm Giovanni the YouTube host at coin Telegraph in our aims we introduce you To fascinating projects and ideas that Shape the present and the future Landscape of web3 people and the massive Teamwork behind it so today we are going To talk about the long-awaited Shanghai Upgrade which is supposed to happen Today what we expect from it and how it Will affect defy and liquid staking in Particular we'd also love to hear Thoughts uh on the subject from our Audience so please share your thoughts In the chat during our conversation Joining us today is Daniel Dizon Daniel Is the founder of swell and ethereum Liquid sticking protocol that has gamer Support from prominent figures like Mark Cuban bankless framework and others so Before establishing swell Daniel Successfully launched and exited a web 2 Startup and provided advisory services To government on emerging blockchain Technologies hello Daniel how are you Today I'm doing really well Um thank you for having me uh it's a Very exciting time for ethereum and the Broader crypto ecosystem and it's great

To be chatting uh with cointelegraph Today For sure and before we go any further With our conversation I would like to Remind our audience said this is um an Interactive show so please send your Questions in the chat and we're gonna Answer them during the live session also Be sure to like the video and subscribe To our channel so that you don't miss Our next AMA sessions so before we start With a question I would like to show our Audience an introduction video about Swell Let's see [Music] Foreign Let's get started first with a bit of Your background so tell us more about Yourself how you got involved with Crypto and uh specifically Um in terms of ethereum staking and also How the situation is in terms of Blockchain situation the blockchain Landscape in Australia I know that you Are from Australia Yeah sure thing Um so I'm the founder and CEO for swell Which is an ethereum liquid staking Protocol I've been in this space for the Past several years now and originally What drew me to the space was really the Sort of the philosophical Roots behind Like the original uh crypto thinking

About promoting Freedom self-sovereignty Open finance and really presenting a Promise for what would likely be uh the Future of the internet and the most sort Of logical place for that to be was in The ethereum blockchain Um in terms of my specific background Um yeah prior to swell was a web 2 Founder and also provided advisory Services on blockchain digital assets to Our various government agencies Um insofar as Australia is concerned Um the blockchain situation in Australia Is continuously evolving but generally I'd say that the interaction between Industry regulation and policy has been Quite supportive of crypto developments Okay that's that sounds good we we know That for example in the United States Lately it's not experiencing the best of Its times I mean the cryptocurrency Industry so it's nice to know that in a Place like Australia the Um the situation is a little bit more The environment is is friendly and it's Supportive Um So yeah just to remind our audience Again if you have any questions for Daniel just write in the chat and we'll Uh we'll definitely address them Um so talking about swell specifically Your company so what was the inspiration Behind the developing uh suell which is

A non-custodial eat liquid sticking Protocol and what are some other Innovative features or functionalities That make swell unique compared to other Liquid staking Solutions in the market Yeah good question Um so in effect swell Labs Um is a major contributor to swelldale Which is responsible for developing uh The non-custodial liquid sticking Protocol Um Overall like the inspiration is really About trying to achieve a particular Mission Um and our mission is to deliver the World's best liquid staking experience Simplify access to D5 and also attempt To secure or help secure the future of Ethereum Um and really what we're trying to build Here is a compelling way for people to Liquid stake their wreath Um I think what makes swell different Um and a better proposition for people Looking to stake their reef is that we Really prioritize the Simplicity and Ease of use Um for our dap Um we've had a lot of positive feedback On our UI and the overall staking Experience The second thing that we do that I think Is different and better is the fact that

We really push for accessibility to defy Uh for the average user so through our In-app native vaults people can access The D5 strategies in-house And in effect create a One-Stop shop Which is much more convenient for the User and finally I think the thing that Makes us sort of different is that we Present another alternative solution That I think is important for people who Are looking to stake uh given the Current sort of uh competitive Distribution in ethereum is taking at The moment that there does need to be More uh competition and innovation in The space generally And so let's talk a little bit about the Shanghai upgrade which is the probably The main event in ethereum in 2023 we Saw last year there was the merge in um In the Autumn uh the Shanghai upgrade is Like the uh second part of the merge Which will make ethereum fully proof of Stake uh system so how do you expect the Upgrade the Shanghai upgrade to impact The ethereum ecosystem and its gas fees What new opportunities could arise for D5 Integrations and how will it Influence the liquidity and trading Dynamics of staking related assets in The defined Market Yeah sure I think uh overall Um The Shanghai cappella upgrade isn't that

Positive for ethereum in effect what It's doing is reducing the perceived and Actual risk around things like liquidity Things like technology delivery around Staking youth Um in the short term we would expect to See some flux with some cell pressure Although Um that that is that that sort of stands To be uh quite minimal uh in the grand Scheme Things and so I'm personally quite Optimistic about Um ethereum and in particular uh the Stake industry to grow materially Um as a result Um you mentioned gas fees in terms of Gas fees Um we would expect to see a bit of a Spiking activity Um you know following the upgrade and The corresponding rise in fees but over The medium term you know we're going to See more and more upgrades on the Ethereum roadmap which will in effect Reduce gas fees and we're seeing more uh Innovation and activity happening on Layer 2 scaling Solutions which with an Effect help to solve for the gas prices Um on the main chain Um and so going back to the core of sort Of functionality enablement for uh Shanghai it's really about the Withdrawals so in effect what's happened

Is The risk around staking is effectively Reduced and the rewards effectively says Stay the same so what you have Um as a result is a much better sort of Risk reward profile Um and more staking participation to Come through as a result Um and then in terms of D5 what we're Going to see is really a Cambridge Explosion uh that is going to be powered By the liquid staking tokens which are In effect receipt Um collateral for the actual Um Um stake teeth on the ethereum Blockchain and we're starting to see This materialize Um within the ecosystem on crypto Twitter and the like with you know Trending narratives and hashtags like Lsd5 And then in terms of the specific Um Uh impact on on the ecosystem at large We'll we'll see greater liquidity Provisioning um there'll be more and More Dex Innovation to really drive that Liquidity for the lsts and overall Um I'd expect to see an enhanced uh sort Of trading experience for users and more And more adoption of LLCs in various uh Protocols that are you know composably Building

Um in interacting with the lsts Mm-hmm Yeah it seems that your your outlook is Sort of matching what I what I was Discussing with other experts not long Ago about the potential outcome of the Shanghai upgrade so Um as we said the reduction of this risk Reward profile which will bring more Capital into the ecosystem is something That I I also heard from other experts So yeah it seems that it's uh it's a Very bullish event for For the future of ethereum especially Long term and now discussing the Relationship between the Shanghai Upgrade and swell so What potential benefits and challenges Does the Shanghai upgrade pose for swell And do you anticipate any changes in the User experience of your product Yeah sure so I think Shanghai presents Several benefits to as well Um you know the primary ones are the Fact that there's going to be greater Confidence in the ethereum ecosystem Um we will effectively have the Withdrawals finally enabled and In effects of a lot of the negative Sentiment around ethereum not being able To function withdrawals at the native Level we'll also have a higher staking Participation rate as a result and Overall we'll see this particular event

As being a catalyst for liquid staking Protocols like swell and we'll look to Grow our share of Market within this Within the liquid staking sector which In and of itself is you know proving out To be the most popular form of people to Stake their eth Um generally speaking the challenges are Uh are are sort of challenges that will Impact Um all liquids taking protocols um Really the the primary challenge will be About Um sort of managing uh the subsequent Um ShakeOut and the Um sort of the the performance around Withdrawals and cues and getting a a Sense of how that will play out Um and then trying to uh interact and Provide the best Best in Class user Experience around uh withdrawals and Timing for withdrawals Um and so for us as well it will be About prioritizing Um that on our roadmap to enable Um the unstaking feature following um Shanghai and and other priorities uh Within our roadmap Mm-hmm Um cool and now Um I was just wondering regarding the Potential Um collateral effects of this of this Event

Um so how do you plan to to handle the Potential fluctuation in stake in Awards And token prices after the upgrade and How will you address the potential uh For front running and other forms of Manipulations that might happen for Following the upgrade Yeah so so generally we'd expect this There to be like a minimal Um fluctuation in staking rewards um Overall Um and on the token pricing side Um you know where we expect to see some You know upward price action um in the Medium to longer term Um with Um uh Shanghai being fully implemented Um so overall that that's quite positive For the protocol Um in terms of front running and other Forms of uh manipulation Um we as well adhere to best practice on This front Um you know where there are several Measures that we employ Um these include you know establishing And actively managing liquidity on on Dexes and amms Implementing Technologies such as flash Flashbots with our node operator Partners as well as uh employing and Working closely with some of the Leadings cyber security firms that Specialize in smart contract and these

Sorts of vulnerabilities within the Overall protocol architecture Um and um yes overall you know we're Quite confident that we'll be able to Provide a a very fair open and Transparent user experience for for our Users Mm-hmm yeah and we know that user Experience is a very important aspect That defy should actually focus on if it Wants to really replace the traditional Financial system as we know it uh but Also an important aspect it's is Security so we know that defy last year Was subject to several Um exploits and so a lot of people might Be uh interesting knowing the level of Security that your pro your product is Providing so can you elaborate on the Security measures and risk mitigation Strategies that as well implements to Ensure the safety of users assets Yeah it's a great question Um so Sort of philosophically and by Design Our number one priority is the Safety And Security of users funds Um you know you can see this in in our Design choices swelling is fully Non-custodial and so what that means is The user's assets are effectively their Own we have no control over it so that Provides greater Assurance around The core principles of self-custoding

One's assets Um in addition to that we're audited by Leading cyber security firms that uh are Effectively Best in Class in the sector Additionally to that we'll be opening up A bug bounty on our open source smart Contracts in due course that will serve As a further mitigation mechanism On top of that there are other risk Management measures that we are Employing at Swell including our Selection process and management process For our node operator Partners many of Whom are institutional and have been the Space really since the Inception of the Beacon chain and when staking actually Went live as well as our staking pool Design and and a whole host of other Measures but overall Safety and Security Is part and parcel of of what we're Building Okay great Um yeah before we move on to the next Question I just want to remind again our Audience that Daniel is open to Answering any questions that you have Concerning the functioning of swell but Also in general about the um the Shanghai upgrade and what that means For the future of ethereum Um so please don't hesitate to write Your questions in the chat Um so moving forward I would like to Talk a little bit about the Garner

Governance and the community in your in Your product so what role do governance And Community involvement play in the Development and decision-making process For your protocol and what initiatives Or programs do you have for the swell Community Sure overall from a governance Perspective as well as implementing a Path of progressive decentralization in The protocol Um we're quite early in that stage but We are committed to progressively Decentralizing Ultimately the the Dow would like to be Fully Community owned and directed and The terminal state will be something That's you know fully ossified and uh You know functions Um like a Dell should function Um so far in terms of the community side Of things we're very fortunate to have a Very Ardent community of swell Supporters or equinoxes they're Affectionately called Um that have been quite pivotal in Helping to drive awareness for our Protocol and the various Um sort of updates that we're pushing Out to the community to let people know About you know as well and and our uh Soon to come mainnet launch in terms of Initiatives we have several in place at The moment including Ambassador programs

And we've recently also announced uh an Ecosystem Council which we're forming Together Um so encourage people to really just Join our Discord and follow us on on Twitter for for the full sort of Breakdown on how you can get involved as Well but uh but yeah we're at Dallas We're very open to having people jump in The community and and contribute Okay so just to make sure I understand Correctly Um is the governance of swell already Um Led by a Dao or it's like where you are Going currently but yeah it's like an Ongoing process Yeah it's an ongoing process Um it's a process of you know Progressive decentralization Um over time you know we'd like to see More and more Um uh important feedback from the Community but initially when we're Designing swell there needs to be quite An opinionated Um set of design choices that we need to Make and eventually we'll hand over Ownership and Direction Um over to the community Um in time but we've tried to be a Dell Uh from day one with these sorts of Constraints in mind Mm-hmm

Okay sounds great and uh now I would Like to discuss a little bit how swell Is interacting with the other D5 Protocols so we know that uh Um composability and interaction among Different protocols is another very Important feature of of the defy Ecosystem so if you can tell us a little Bit more on how swell interact with Other D5 protocols and what kind of Partnerships or collaborations you have Established to enhance the utility and Reach of your protocol and also how do You see the lsdf FI space evolving Yeah so as well as core product is to Provide liquid staking and we do that Through our liquid staking receipt token Which is swell eat or sweethe uh in Effect what Swift is is really designed To serve as uh a receipt for uh the State thief on the ethereum blockchain Um so in finance terms what it is is Re-hypothecated collateral which can be Utilized uh across the entire spectrum Of D5 much in the same way that eth can Um so the Partnerships and Collaborations as a result of that Design is quite broad Um which is great Um so the Partnerships and Collaborations that we're focusing and Prioritizing include Um the centralized exchanges the Liquidity

Um uh pools boosted yield products Options derivatives Collateralized deposition protocols Borrow lend protocols also Layer Two Um scaling Solutions wallets exchanges And and a whole host of other Um bits and pieces of of D5 and layers Around it In terms of LSD Phi Um I would expect that to really take Off following Shanghai we're starting to See more and more uh players entering The space within liquid staking Um generally and also in those protocols Which are uh building off the top of Liquid staking tokens like like Synthetics and indexed products as well And what we'll see here is just Continual Innovation and more growth in The sector powered by the lsts or lsds Mm-hmm Okay And uh so you mentioned your native Token uh the so the Swiss native token Um as you said this is this works as Sort of a receipt that users can get in Exchange for their sake eth so can you Discuss a little bit the tokenomics of Your platform Um uh specifically the native token Swift and how it is used for Incentivizing participation and the Secure and securing the protocol itself Yeah sure

So Swiss is effectively Um as you mentioned our liquid saving Receipt token and so when people stake Ether swell they automatically receive And sweet in their wallet Um in terms of our like a traditional Native governance token Um our current status on that is that We're still pre-token but we will have a Token coming live in the coming months And we are looking to firm up what that Tokonomics approach is we're calling it And will be effectively doing a survey And research Um uh deep dive into what works and what Doesn't work within tokenomics and some Of the criticisms that other protocols Have had around Their their token including things like Governance utility incentive and Disincentive and or a whole host of Things Um so yeah there'll be more information Coming on that in due course Mm-hmm Yeah and uh now I would like to know More about your plans for the next Future so Um of course the Shanghai upgrade is Taking place today and we're gonna see How this is gonna play out uh in the Next days weeks and months Um but first but I would like to know From you so how do you plan to measure

The success of your liquid staking Protocol compared to other competitors As well and what are the key Milestones That you aim to achieve in the following Months and years like some sort of road Map So I think ultimately the success of Swell is really based on the feedback And adoption that we get from the Ecosystem Uh firstly starting with the stakers and Then other protocols and the like From a uh from a a measurement Standpoint it's the standard primary Metrics such as you know tvl the growth Rate thereof as well as the uh driving As much liquidity and Integrations as we Can Um to our liquid segment token suite and Overall what we're trying to do is bring As much utility as possible we're trying To make it as accessible as possible and Also as liquid as possible and then so In terms of specific Milestones over the Coming months and years it's about you Know getting to mainnet driving as much Of those Integrations as possible Driving accessibility through layer twos And then ensuring that we're Appropriately interfacing without then Soon to be launched as well Governor Sogan to provide as much utility and in Governance Um around that and then to continuously

Push for more and more uh sort of Innovation in the space and Um yeah continue to grow and and really Drive it as a community effort Yeah that's exciting I mean everything That you tell that you told us is also Gonna happen together with the Development of ethereum itself so Ethereum is gonna go through more Upgrades in the coming months and years And the roadmap uh is still long But Of course the Shanghai upgrade was was a Major is a major event Um so yeah Um Daniel Um I think that we could wrap up here The AMA so before we finish the the Conversation I would like to really Thank our special guest Daniel for Joining us and sharing uh your valuable Insights on the ethereum liquid staking The Shanghai upgrade consequences and The expansion of the Divine ecosystem so Your expertise has been enlightening and I will surely be beneficial and it will Surely be beneficial to our highly Experienced crypto audience so before we Sign off I'm certain our listeners would Be interested to know how they get into How can get in they can get in touch With you Um or with your team if they have any Questions so could you please tell us

The best way to connect with the swell Team and your community Yeah the best way would just be to Follow us on Twitter and also join Um our Discord Um so yeah if you if you just Google you Know spell Network Um you'll find it Um and yeah we're always so happy to Um have a chat and um we welcome as many People as possible into our community Awesome thanks Daniel so I want to also Thank our listeners for tuning in and Participating in the conversation so if You found today's discussion interesting And you want to see more of these amas Please make sure to subscribe to our Channel and put a like on the video so That you will receive the updates about The following Mas you can find us on Twitter telegram Instagram and of course YouTube so once again thank you thank You for listening I'm Giovanni host We'll see you in the next video [Music] [Music] Thank you Foreign [Music]