Swell Network Halts swETH, rswETH Deposits and Withdrawals, Says Assets Are Safe

Swell Network, a decentralized finance protocol, has temporarily suspended deposits and withdrawals for its Ethereum-based staking tokens swETH and rswETH. The move came after a gap emerged between the tokens' actual value and the value shown in their smart contracts.

Digital-asset outlet Unchained reported on Oct. 24 that Swell said in an official X post on Oct. 23 it would halt deposits and withdrawals until the net asset value, or NAV, of swETH and rswETH is normalized.

The problem was that the exchange rates shown in the smart contracts for the two tokens were set above their actual market prices.

As of Oct. 23, one swETH was shown in the smart contract as exchangeable for about 1.203 Ether. On decentralized exchange Uniswap, however, one swETH was trading at about 1.089 Ether. For rswETH, the smart contract showed an exchange rate of 1.138 Ether per token, while the market price was about 1.029 Ether.

Some have raised the possibility that administrator privileges were compromised. On-chain analyst Spreek wrote on Oct. 21 that the admin keys for the two tokens appeared to have been stolen and that an attacker was artificially inflating the tokens' NAV.

Swell denied that any funds were at risk. “All funds are safe,” the company said, adding that no Ether had flowed out of the smart contracts tied to deposits and withdrawals for swETH and rswETH.