Swell Pauses swETH and rswETH Withdrawals as Contract Rates Rise Above Normal

Swell pauses swETH and rswETH deposits and withdrawals while investigating abnormal Ethereum exchange rates and a potential contract security issue.

Swell has paused deposits and withdrawals for its swETH and rswETH liquid staking tokens after unusually high contract exchange rates raised concerns about a potential security issue. The Ethereum staking protocol said the pause will remain in place while it corrects the net asset values (NAV) and exchange rates of both tokens.

According to information reported by Wu Blockchain, citing Unchained, the swETH and rswETH contracts displayed exchange rates of approximately 1.203 ETH and 1.138 ETH, respectively. Those figures were about 6% and 5% above their normal levels, prompting attention to the contracts and the mechanism used to determine the tokens' exchange rates.

Swell Investigates Abnormal Token Exchange Rates

The pause affects deposits and withdrawals for both swETH and rswETH. Swell said it is working to correct the tokens' NAV figures and exchange rates. The protocol's action temporarily restricts these operations while the issue is investigated.

The reported exchange rates were a central detail in the incident. The swETH contract showed a rate of approximately 1.203 ETH, around 6% higher than normal, while rswETH showed approximately 1.138 ETH, about 5% above its usual level. These deviations were reported as abnormal, although the available information does not establish what caused them.

Analyst Raises Concern Over Possible Admin-Key Compromise

On-chain analyst Spreek raised the possibility that the relevant token administrator keys had been compromised. Spreek also identified a malicious upgrade contract that could potentially affect around 2,500 ETH.

However, the reported upgrade had not been executed at the time of the report. The potential exposure therefore should not be interpreted as confirmation that 2,500 ETH had been stolen or transferred. The available information does not establish that the suspected admin-key compromise was the cause of the abnormal exchange rates.

Swell Says No ETH Has Left Affected Contracts

Swell stated that no ETH had been transferred out of the affected contracts. The protocol also said the exact cause of the incident remained under investigation, leaving the underlying issue unresolved in the reported update.

The distinction between a potentially harmful markets contract upgrade and a completed transaction remains important. Although Spreek identified a malicious upgrade contract with a potential impact of around 2,500 ETH, the upgrade had not yet been executed, and Swell reported no ETH outflows from the affected contracts.

For now, deposits and withdrawals for swETH and rswETH remain paused while Swell works to correct the reported NAV and exchange-rate discrepancies and investigates what caused them.

Writer: Victoria Hale
Technology & Blockchain Writer

Victoria Hale writes about blockchain technology, digital infrastructure, and the intersection of emerging technologies with finance. Her articles explore how new protocols and systems are shaping the evolving digital economy.

She prioritises clarity and accuracy when explaining technical developments to a general audience.

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