Blackswan Token $SWAN Logic Update
Cryptocurrency markets are heavily correlated and full of downside tail risk. While there are many tokens competing to achieve the highest positive growth during these periods, virtually none of the projects plan for the opposite, extreme contraction during market cycles.
Blackswan maintains stability not only during market growth cycles but unleashes growth during contractionary market periods with the aim to move as an anti-fragile asset or uncertainty index.
We have had time to reflect pre-launch on the Blackswan $SWAN token logic, and due to suggestions from our community, and what we believe to be superior improvements to ultimately achieve our vision, we have decided to make adjustments to our logic outlined in the whitepaper. (These changes will be reflected in our whitepaper within 24 hours of the article being released).
The changes are related to equilibrium, the remaining portion of the article will go more in-depth into how we calculate uncertainty.
Equilibrium
The equilibrium calculation is essential as it determines market uncertainty, and the timing for the aggressive Blackswan Fund rewards. Our initial logic was looking at the number of $SWAN tokens being provided as liquidity compared to the total supply.
We have decided to adjust this calculation to take into account the total dollar value of liquidity. This will mean that market uncertainty can be triggered during major negative price action events in addition to low liquidity. This achieves our end goal in a much more effective way, and rules out some unexpected flaws when looking at $SWAN token supply being provided as liquidity.
Uncertainty
In order to determine uncertainty, our contracts calculate an average dollar value of liquidity over the past 30 days. For example, if there is $400k in liquidity over the past 30 days, then the average will be $400k which is the equilibrium. (We are able to adjust the number of days the average is calculated with if we feel this period is too long).
There are two events that can occur with the equilibrium. When liquidity is above the equilibrium, this is classified as a high liquidity period, which is when SWAN is distributed to liquidity providers and USDC is accumulated in the Blackswan Fund.
There is a buffer zone below the equilibrium (which can be fine tuned by the team) which classifies uncertainty. At launch, the buffer zone will likely be 25%. This means that if the equilibrium is $400k, then liquidity must fall to $300k in order for Blackswan Fund rewards to get activated.
If liquidity is within but not below the buffer zone, then Blackswan Fund rewards are not distributed, and there are no $SWAN rewards going to LP stakers. This is because there is substantial market stability, meaning that LPs are taking minimal risk at this time.
We hope to have a nice graphical interface on the website representing current liquidity, equilibrium and the buffer zone to define uncertainty that will make it easy for the community to track.
