Stargate Integration Proposal: Swell L2 ETH Pool Deployment
Summary
This proposal outlines a request for the Stargate DAO to approve and enact a deployment of the Stargate dapp with an ETH pool on Swell L2. The deployment aims to achieve a 10% yield on $5 million worth of ETH liquidity and will be supported by Swell’s native incentive programs.
Motivation
Network Overview
Swell L2 is the Restaking Yield Layer, powered by Proof of Restake, built on the OP Stack and part of the Optimism Superchain ecosystem. As a member of the Superchain, Swell L2 benefits from:
- Proven scalability and security of the OP Stack architecture
- Shared security model with other Superchain members
- Standardized bridge infrastructure
- Network effects of the growing OP ecosystem
- Seamless interoperability with other OP Stack chains
Key advantages of Swell L2 include:
- Low TX Fees through the OP Stack
- Native yield generation through liquid staking
- Full EVM compatibility
- Unified security through the OP Stack
Strategic Benefits
Stargate Benefits
TVL:
Swell L2 has been the 2 second fastest growing L2, beating Blast to 1 billion on pre-deposits
and continues to be one of the biggest pre-deposit campaigns of this year
Bridge Volumes:
Due to Swells popularity, we expect stargates integration into Swell L2 to bring substantial volume to Stargates Bridge. This is due to the amount of TVL we expect and the dominance of OFTs in the assets being prioritized on the L2.
Shared Liquidity: Integration with Stargate will connect Swell L2 to Stargate’s extensive network of connected chains, enhancing cross-chain liquidity and further strengthening the Superchain ecosystem.
Cross-Chain Efficiency: Swell L2 users will gain access to secure, cost-effective cross-chain transactions through Stargate’s established infrastructure leveraging the LZ messaging protocol
DeFi Ecosystem Growth: The integration will catalyze Swell’s DeFi ecosystem by attracting liquidity providers and encouraging new protocols to build on top of Stargate, while leveraging the network effects of the Superchain.
Proposal
Deploy Stargate on Swell L2 with an initial ETH pool targeting $5 million in liquidity. The Layerzero endpoint will be available on Swell L2 from day one of deployment, providing seamless integration with both the Superchain and the broader blockchain ecosystem.
Swell further proposes that Stargate DAO redirect 2 million in ETH to help seed the pool initially from Stargate V1 pools. Stargate DAO is free to withdraw whenever they need the liquidity elsewhere. Having this initial liquidity will help ease initial bootstrapping and Swell is confident that the 10% APR will allow these pools to easily hit the 5 million target goal
Incentive Structure
Swell Rewards Program
- Dedicated allocation of Swell tokens to incentivize Stargate LPs
- Target yield of 10% APY on the $5 million ETH pool
- 50% in STG
- 50% in SWELL
- Swell will provide 5% of this yield with the rest coming from STG as per SIP #23
Conclusion
Swell L2 is the restaking yield layer, powered by proof of restake. This proposal presents a comprehensive integration plan that leverages Swell L2’s infrastructure as part of the OP Stack ecosystem while offering attractive yields to liquidity providers. The combination of Swell’s native incentives, Stargate’s established cross-chain capabilities, and the security and scalability of the Superchain will create a powerful solution for ETH bridging and liquidity provision.
The targeted 10% yield on $5 million of ETH liquidity demonstrates a strong commitment to attracting and maintaining liquidity in the Stargate ecosystem while providing meaningful returns to participants. As a member of the Superchain, Swell L2 offers the additional benefits of a proven, standardized architecture and a growing ecosystem of interconnected L2 solutions.
All DAO members are encouraged to participate in this decision-making process to ensure the deployment aligns with both Stargate’s vision and the broader community’s interests.