“The funds are still there,” but the doors have already closed.
The official word from liquid restaking protocol Swell over the past two days has been straightforward. On October 22, it said on X that it had detected suspicious activity involving the swETH and rswETH contracts and was investigating with security partners, adding that “no ETH has left the swETH or rswETH deposit and withdrawal contracts.” On October 23, it posted again: deposits and withdrawals for both tokens had been paused to fully secure the infrastructure, and the next step before reopening was to “restore” their net asset values (NAVs) to the correct figures.
That’s where the problem lies. The value of a liquid staking token in ETH depends on the exchange rate in its contract. If that rate can be changed incorrectly, then even if not a single ETH has left the pool, the prices at which buyers are willing to take the tokens on the secondary market—and lenders are willing to accept them as collateral—can all go haywire. Swell hasn’t disclosed the cause, and various outside theories remain unconfirmed by the team. There’s also no timeline for reopening.
My take: “the funds are safe” and “you can get out whenever you want” are two different things. If you hold these tokens, don’t rush to dump them at a steep discount in a pool, and don’t use them as collateral to lever up. Wait until the team explains the NAVs and what happened. Also, phishing links are everywhere during incidents like this, so stick to official channels.
The official word from liquid restaking protocol Swell over the past two days has been straightforward. On October 22, it said on X that it had detected suspicious activity involving the swETH and rswETH contracts and was investigating with security partners, adding that “no ETH has left the swETH or rswETH deposit and withdrawal contracts.” On October 23, it posted again: deposits and withdrawals for both tokens had been paused to fully secure the infrastructure, and the next step before reopening was to “restore” their net asset values (NAVs) to the correct figures.
That’s where the problem lies. The value of a liquid staking token in ETH depends on the exchange rate in its contract. If that rate can be changed incorrectly, then even if not a single ETH has left the pool, the prices at which buyers are willing to take the tokens on the secondary market—and lenders are willing to accept them as collateral—can all go haywire. Swell hasn’t disclosed the cause, and various outside theories remain unconfirmed by the team. There’s also no timeline for reopening.
My take: “the funds are safe” and “you can get out whenever you want” are two different things. If you hold these tokens, don’t rush to dump them at a steep discount in a pool, and don’t use them as collateral to lever up. Wait until the team explains the NAVs and what happened. Also, phishing links are everywhere during incidents like this, so stick to official channels.