Swirl launches on IOTA as first liquid staking protocol

BERLIN. May 7, 2025 — Swirl, the liquid staking solution, launches on the IOTA mainnet, one of the leading Layer 1 networks. This independent ecosystem project built on the IOTA network enables users to stake IOTA tokens, receive stIOTA tokens in return, and use their value across the IOTA DeFi ecosystem.

Swirl is built on IOTA’s decentralized contract infrastructure, using Move-based smart contracts to manage staking operations in a transparent and auditable manner. While some components—such as validator management and backend operations—are currently controlled via MultiSignature Wallets, the system is architected to support greater decentralization over time. Swirl is taking a measured approach to decentralization, focusing first on security, user experience, and smart contract reliability, with the goal of evolving into a more distributed system as the IOTA staking ecosystem matures.

The integration of the new liquid staking protocol follows shortly after IOTA upgraded its layer 1 to a Move-based object ledger earlier this week, on May 5th, 2025 — IOTA’s most fundamental transformation yet. 

With the Swirl protocol, instead of users’ IOTA tokens being locked during staking, users receive stIOTA tokens, which serve as a liquid representation or redeemable claim on staked IOTA. These tokens can be redeemed for the underlying staked IOTA or any applicable rewards. Alternatively, users can trade stIOTA on secondary markets or use the tokens as collateral in other DeFi protocols, maintaining the liquidity of staked assets. 

With traditional delegated staking, users earn rewards for providing their assets to validators, thereby securing the network by enabling them to validate transactions. By unlocking the value of staked IOTA, Swirl ensures greater capital efficiency, allowing users to benefit from staking without sacrificing liquidity. 

The advantages of instant and unlocked liquidity include:

• Immediate access to liquid assets: Access is instant, even while IOTA tokens are staked.

• DeFi integration: stIOTA tokens can be traded on decentralized exchanges (DEXs), used as collateral in lending protocols to borrow assets, or deposited into liquidity pools to earn additional rewards.

• Multiple yield opportunities: Users can leverage yield farming, arbitrage trading, and lending to maximize ROI while their IOTA remains staked.

By integrating stIOTA tokens into the IOTA DeFi ecosystem, users can maximize earnings through the following strategies:

• Liquidity mining: Users can provide liquidity to DEXs, money markets, and similar DeFi dApps, earning a share of protocol-generated fees and reward tokens while maintaining exposure to staked assets and earning underlying yield.

• Yield aggregators, strategies, and vaults: Automated yield farming strategies allow users to compound returns with minimal effort, maximizing passive income while benefiting from DeFi composability.

• Trading: Users can trade stIOTA tokens on secondary markets, allowing arbitrage opportunities for users who strategically manage staking, unstaking, and DeFi positions.. Using stIOTA as collateral also allows users to open leveraged positions against it, further unlocking the efficiency of their capital.

Asphere, the enterprise services division of Ankr, played a foundational role in co-engineering Swirl and will assist in validator node operations moving forward. With deep expertise in Web3 and a track record of supporting blockchain initiatives for enterprises such as Microsoft, Binance, and Polygon, Asphere ensures Swirl is backed by industry-best security, reliability, and performance. Its globally distributed validator network will contribute to a seamless and resilient staking experience for Swirl’s users.

With Swirl, users can unstake stIOTA at any time through the instant unstake feature. Instead of waiting for a lock-up period as in other liquidity protocols, users can burn their stIOTA and immediately receive IOTA, ensuring greater liquidity and accessibility while still benefiting from staking rewards.

Users will actively contribute to the security and integrity of the IOTA network. Swirl’s liquid staking model channels user stakes into the protocol’s validation infrastructure, helping maintain a stable and secure environment for all participants.

By staking IOTA with Swirl, users automatically accrue daily staking rewards with an annual percentage yield (APY) of up to 10%–15%. These rewards are seamlessly integrated into the protocol, increasing the value of stIOTA over time. 

Key details to keep in mind on the reward system:

• Auto-compounding: Rewards are automatically funneled into the staking pool, eliminating the need for manual claims.

• stIOTA value appreciation: As rewards accumulate, the stIOTA-to-IOTA ratio gradually increases, reflecting its growing worth.

• Initial conversion rate: The starting ratio for stIOTA to IOTA is 1:1, but over time, stIOTA appreciates relative to IOTA as staking rewards accrue.

“Our partnership with Swirl enables new forms of utility through DeFi,” says Dominik Schiener, Co-Founder and Chair of the IOTA Foundation. “By equipping the IOTA ecosystem with tools that users need to pursue sustainable capital growth strategies and doing so with the right partners who share in our commitment to decentralization, security, and a user experience marked by diversification, we are setting new standards for the future of decentralized finance.”