Swell’s liquid staking protocol sees over $125 million of inflows in December

Swell’s liquid staking protocol has seen its total value double this month to 108,000 ether, worth approximately $245 million.

Since the beginning of December, Swell has registered nearly $125 million in ETH deposits, placing it as the fourth-largest liquid staking protocol. It is currently behind leading protocols such as Lido with 9 million ETH, Rocket Pool with 846,000 ETH and Frax with 236,000 ETH, according to Dune data collected by Dragonfly analyst Hildobby.

The increase in Swell inflows coincides with the team announcing ‘Pearl’ rewards in the form of points for users who mint their liquid staking token, swETH, and also ‘redraw’ it on the EigenLayer platform.

Since mid-December, when the rewards program began, there has been notable activity, with users earning over 53,000 swETH worth over $120 million. Most of this was then deposited on EigenLayer.

EigenLayer allows users to deposit and redeploy ether from a variety of liquid staking tokens to secure third-party networks. It expanded its supported assets with six additional liquid staking tokens, including Swell’s swETH, Stakewise’s sETH, Stader’s xETH, Origin’s oETH, Ankr’s ankrETH, and Wrapped Beacon Ether (wBETH). Of these new additions, Swell has proven to be one of the biggest beneficiaries in terms of asset inflows.

Concerns about centralization

Despite being documented risksSwell’s TVL increase shows that liquid staking remains a growing niche within the Ethereum ecosystem. Its popularity is largely attributed to simplifying the complexities associated with staking, especially when it comes to running validator nodes and allowing users to maintain control over their capital.

Swell users who stake their ETH will receive a yield-bearing liquid staking token in return. The token not only has value, but also offers flexibility, as it can be held or used within the broader DeFi ecosystem to generate additional returns.