Wavedrops Update: Real Token Rewards

125,000,000 Swell Tokens will be dropped in Wavedrop 3!

That’s right—no more points. Just tokens streamed into your wallet via a new reward mechanism that replaces both Black Pearls and Ecosystem Points.

From December 17th, these points will stop accruing. Instead, you will be able to track your Wavedrop earnings onchain as wSWELL.

wSWELL is simply a locked 1:1 wrapper for SWELL distributed via third-party protocol Merkl. As in Wavedrops 1 and 2, it can be earned by holding Swell assets or using approved DeFi Protocols. At the end of each Wavedrop, wSWELL can be redeemed for its full value of SWELL. Or any time earlier for a discounted amount.

This new mechanism—enabled by the recent token launch—represents the realization of a long-held ambition. It enables Swell to let go of the tired points model, deliver more transparency and optionality, and return to the greatness of token rewards in the early days of DeFi!

How it works

1. Visit the Portfolio page in the Swell dApp to find the best APRs

2. Deposit your assets and watch the number of your tokens go up

3. Claim wSWELL at the end of the Wavedrop and unwrap it for SWELL!*

*You can claim wSWELL at any time, and unwrapping will be enabled in early January 2025.

What about Ecosystem Points?

If you're also earning Ecosystem Rewards in the form of Ecosystem Points in the Pre-Launch or Ecosystem Earn Vaults, you'll continue to receive Swellchain airdrops associated with those points. But from December 17th, these airdrop rewards will appear as the respective tokens in the Swell app, to be claimed once the corresponding ecosystem project airdrop goes live.

Get ready to ride the first Wave of Wavedrop 3!

The 125,000,000 SWELL set to be dropped in Wavedrop 3 will be made available in separate Waves, with the earliest riders of each Wave accruing a greater share of the fixed amount.

At the start of each Wave, Swell will reveal the length of the Wave, the exact token amount to be distributed, and which activities will be rewarded—giving you an opportunity to position your assets to capitalize on the flow of SWELL.

Stay tuned to find out what rewards the first Wave of Wavedrop 3 will bring when it starts on December 17th!

FAQ

What will happen to Ecosystem Points?

Ecosystem Points will stop accruing to the Pre-Launch on December 17th.

25% of the tokens from ecosystem projects have been allocated to Pre-Launch depositors until December 17th.

An additional 25% of the tokens from ecosystem projects will be distributed during the 10 week period of Wavedrop 3.

The remaining 50% of tokens from ecosystem projects will be distributed in following Wavedrops.

What will happen to Black Pearls?

Black Pearls will stop accruing on December 17th and be replaced with SWELL rewards.

Any Black Pearls earned in Wavedrop 2 can still be used to claim SWELL on the Swell City page on the date of the Wavedrop 2 distribution, currently expected around January 10th.

Can I claim SWELL earned in Wavedrops early?

SWELL earned in Ecosystem Wavedrops will be distributed daily through Merkl in the form of locked wrapper wSWELL, which can be unlocked whenever you choose.*

You can either wait until the end of the 10 week Wavedrop to get 100% of your SWELL, or claim early and sacrifice a portion of your tokens.

35% is unlocked immediately when you first claim wSWELL, and the remaining 65% unlocks linearly over the rest of the 10 weeks, reaching full unlock at maturity. You are free to redeem SWELL at any point during the unlock period, but any locked SWELL remaining will be forfeited and returned to the Ecosystem Allocation..

For example, Alice provides 10,000 liquidity to Neptune on Swellchain on December 17th and earns 100 wSWELL per week as rewards, with the APY displaying on the Swell app. After 5 weeks, she decides to transfer 500 wSWELL to her wallet. At this point the clock starts ticking to unlock 500 SWELL. She can immediately redeem 175 SWELL if she wishes (35% of her expected 500 SWELL at maturity). If she does this, however, all remaining 325 SWELL will be returned to the Swell DAO. If she decides to wait the full 10 weeks she will be free to redeem a full 500 SWELL at maturity. She can also redeem anytime in between to get a proportional share of the unlocked SWELL.

She can also keep withdrawing wSWELL to her wallet at any time she likes. Each transfer starts a separate unlock schedule. Note that wSWELL is therefore a non-fungible asset, even though it has an ERC20-like interface.

*Unlocking will be enabled in early January 2025.

Will I be able to claim on Swellchain?

Yes, future Wavedrop claims will take place on Swellchain.

In addition, all unclaimed SWELL from Wavedrop 1 and the Voyage will be migrated to be claimed on Swellchain on the date of Wavedrop 2 distribution, currently expected before January 10th. Claims will temporarily close for around 48 hours before this as the migration takes place.

How much wSWELL will be issued in rewards?

The Wavedrop allocations are the same as previously announced: Wavedrops 2 and 3 will account for 1.25% of the supply each, followed by 1% for three Wavedrops thereafter, up to a total of 7.5%.

These tokens will be distributed over each 10 week period, resulting in APRs which will be visible on the Swell app. The specific amount distributed will vary according to which activities are prioritized in each Tide.

How will the rewards appear in the Swell app?

SWELL APRs will be visible on the Swell app, including indicative APYs depending on whether you choose to hold or sell your wSWELL. SWELL rewards will also be visible on Merkl.

Accrued Ecosystem Rewards will be visible in the form of tokens on the Swell app.

Why is wSWELL locked?

Locking SWELL over 10 weeks aligns with the distribution schedule outlined in the first Wavedrops announcement, and helps ensure a balanced and economical distribution of tokens to support long-term ecosystem growth.

‍Will my Wavedrop bonus multiplier carry over into the new system?

Yes, the same bonus multiplier system for riding consecutive waves will continue, with loyal stakers earning both SWELL and Ecosystem Tokens at a higher rate. This will not be implemented in Wavedrop 3 (starting December 17th) but will be restored in Wavedrop 4.

Has Merkl been audited?

Yes. The smart contract was audited by yAudit on October 2nd 2024. The audit was performed by two yAudit lead security researchers HHK and Panda.