Carbon is a decentralized layer 2 cross-chain trading protocol developed by Switcheo Labs. It is built to facilitate trading of advanced financial products-such as options, bonds, and futures-at scale. Carbon uses a custom sidechain and draws on underlying technology from Cosmos Tendermint Core, including:

As a layer 2 solution, Carbon acts as an additional protocol layer that runs alongside Layer 1 networks (i.e. Ethereum, Neo, Zilliqa). It operates independently but remains secured by their underlying security. The design supports faster execution, reduced fees, the use of sophisticated financial instruments, more advanced order types, and cross-chain communication. Carbon relies on the delegated Proof-of-Stake (dPOS) approach from Tendermint Core for consensus. In practice, the chain is protected by a distributed set of validator nodes that validate transactions on the blockchain. 

Carbon supports cross-chain communication by functioning as a bridge to sovereign blockchains. It uses a “relay chain” (Poly Network) to hold and relay cross-chain actions, including deposits and withdrawals between chains. This separate relay chain preserves block headers from the chains involved, allowing cross-chain communication. 

SWTH serves as the native governance token for Carbon. As Carbon’s governance asset, SWTH is available across multiple chains, helping extend the protocol to other blockchain ecosystems and enabling liquidity from outside networks to move into Carbon’s ecosystem. With SWTH, users can participate as liquidity providers on Carbon or on external networks, earning from trading fees along with extra farming incentives.

Carbon is a fully decentralized, community-led development effort. Through its on-chain governance capabilities, SWTH stakers can help shape the project, implement changes, and propose enhancements to the protocol. Backed by the SWTH token, participants gain influence over important decisions through their voting rights.