# Blackswan Token $SWAN 🦢
*“The inability to predict outliers implies the inability to predict the course of history”
― Nassim Nicholas Taleb, The Black Swan*
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 robust token.
Passive liquidity incentives do not make sense in a volatile market. This is because when liquidity is needed most, during periods of uncertainty, passively rewarded liquidity providers are the most likely to exit their liquidity position to protect their capital. This is a fragile, non-robust system that only exacerbates downside and volatility. Liquidity providers should be rewarded according to the amount of risk they are taking, and that risk fluctuates substantially.
Blackswan has inherent utility in that the $SWAN token will experience unique uncorrelated price action with minimal downside. This creates a very attractive speculative asset for both long term and short term holders. There are also staking opportunities with extremely high returns that can allow holders to experience an artificial "stoploss" for their $SWAN holdings.
The Blackswan Fund and other systems built to sustain the token will be scaled around a much larger ecosystem of products designed to siphon fees into the Blackswan Fund to further enhance the strength of the downside protection $SWAN experiences.
In addition, $SWAN holders will receive governance control over important decisions relating to the ecosystem (more details coming soon).
Blackswan creates a scenario for investors that inherently promotes market liquidity without the exposure to the wider cryptocurrency markets through a partial stablecoin backing in the Blackswan Fund and in liquidity pools. This incentivizes a decrease in volatility whilst keeping investor confidence high.
During periods of expansion, classified by a high % of token supply being provided as liquidity, Blackswan rewards liquidity providers with dividends by increasing token supply. At the same time, token supply is siphoned into the Blackswan Fund and automatically sold to stablecoins to have money for what is essentially a "rainy day" fund.
During periods of contraction, classified by a low % of token supply being provided as liquidity, Blackswan liquidity providers receive newly minted LP tokens (made up of 50% stablecoin and 50% $SWAN token). This will be distributed aggressively to incentivize Blackswan Token buying and an increase in liquidity.
While functionality is built into the Blackswan Token to heavily reward liquidity providers during periods of contraction, we expect market participants to anticipate this and at times avoid the Blackswan Fund being utilized all together. This will create a scenario where price action of the Blackswan Token moves in accordance of what the token was designed to do (increase in value during periods of uncertainty) without different operations having to be executed in the Blackswan token contract.
Blackswan strives to decrease tail risk to the downside as the token is designed to become the most valuable when investors are the most uncertain.
The desired market liquidity is defined as the “equilibrium”. This value is represented as a % of total token supply being pooled. The equilibrium will be an average of the total % of $SWAN tokens being provided as liquidity over a period of 7 days.
Pooled liquidity will only count towards the desired equilibrium if pooled with one of our approved stablecoins (USDC, DAI). This allows the token minimal correlation with the wider cryptocurrency markets, as liquidity providers only face risk on one end of their position (Blackswan Token).
The Blackswan supply is designed to always increase for those who are providing liquidity. This is a self-correcting system that shifts supply towards liquidity providers to reach equilibrium through rebalance by minting new LP tokens through the Blackswan Fund. This means that there will never be a time when you are not rewarded for providing liquidity.
When equilibrium is surpassed, supply will increase through passive rewards to liquidity providers similar to traditional liquidity mining programs with a stable APY. This will continue unless liquidity decreases to or past equilibrium.
Supply rebalances occur every 24 hours. During a rebalance, the average % tokens pooled over the past 24 hours will be calculated by looking at the approved stablecoin liquidity pools. Pooled tokens will only be taken into consideration if they have been pooled for at least 24 hours. This is to prevent any manipulation of liquidity at the last minute.
If the system has determined that market liquidity is below the desired equilibrium, 20% of the needed difference in supply will shift towards liquidity providers.
Pre-Rebalance Equilibrium: 30% | Current Liquidity: 20%
Difference = 10% * 20% = 2%
Post-Rebalance Equilibrium: 30% | Current Liquidity: 22%
Supply will shift evenly to all eligible liquidity providers by minting new LP tokens from the Blackswan Fund.
If the system has determined that market liquidity is above the desired equilibrium, token supply will increase by 10% of the difference between current liquidity and equilibrium.
Pre-Rebalance Equilibrium: 30% | Current Liquidity: 40%
Difference = 10% *10% = 1%
Post-Rebalance Equilibrium: 30% | Current Liquidity: 40%
Supply will increase evenly for all liquidity providers of the Blackswan token.
The Blackswan Lake is a staking platform for Blackswan LP tokens from approved stablecoin liquidity pools. You must have your Blackswan LP tokens staked for over 24 hours to receive the benefits of receiving liquidity provider rewards when the token is below equilibrium during rebalance.
Those who are staking their LP tokens in the Blackswan lake will receive benefits when below equilibrium during rebalance by receiving additional LP tokens. These LP tokens are created by minting Blackswan tokens, utilizing the Blackswan Fund for stablecoin collateral, and minting new LP tokens to distribute.
When equilibrium is surpassed, liquidity providers receive passive rewards through the universal increase in supply by the rebalance; however, they will be significantly more protected from downside risk as they are sure to receive the additional rewards should something happen in the market without being blocked by the 24 hour grace period to enter the Lake and receive rewards.
The Blackswan Fund is a system for collateral generation during periods of expansion and contraction to ensure that those who are staking in the Blackswan Lake are always able to receive their additional LP tokens during a rebalance below equilibrium.
The Blackswan Fund receives funding during periods of expansion by siphoning 10% of token supply increases into the fund and immediately selling the tokens for stablecoins proportionate to liquidity pool size for the respective stablecoin.
As the Blackswan ecosystem expands, a major source of funding for the Blackswan Fund will also come from ecosystem fees. In contrast to many other passively rewarded ecosystem tokens, $SWAN will siphon ecosystem profits from other DeFi products that the Blackswan team builds into the Blackswan Fund.
**Staking Reward Distribution**
When below equilibrium, Blackswan Fund rewards going to Blackswan Lake stakers will follow the above reward schedule. Values on the Y-axis are shown as a % of stablecoins held within the Blackswan Fund before going below equilibrium.
Blackswan Fund Balance = $100,000 usdc
Day 1 rewards to be distributed = $25,000 usdc
Rewards are extremely aggressive to promote positive price action during the initial period of uncertainty and to ensure liquidity returns in a timely manner.
If liquidity does not return above equilibrium, rewards will decrease in size over time, however due to the utility of the token, we expect investors to demand the token as they return to the market increasing liquidity once again.
$SWAN will be distributed through an IDO (initial DEX offering) through an LBP (liquidity bootstrapping pool). This will allow the project to launch with existing liquidity, required for some of the most important functions of the project.
*Founder and Development allocation will be vested linearly over a 2 year period. This means that the team will only have access to approximately **3% of the supply at launch**.
We believe that a successful and fair distribution of our token is essential to the long term success of the project. There is no better form of community building and marketing than allowing the very participants of the project to succeed together.
A more in-depth chart of the tokenomics can be seen above. For reference, TGE means "Token Generation Event".
Liquidity incentives are categorized as tokens that will be used to jumpstart the Blackswan Lake and Blackswan Fund. This will be done in a two stage process with distribution pools and high passive incentives to provide liquidity.
The 1,000,000 tokens allocated for liquidity will be matched with $100k from the launchpad funds that will allow for high initial liquidity. This liquidity position will be locked and the official announcement will be on our Twitter / Telegram with more information.
**Where can I trade $SWAN?**
~~Sushiswap~~ (Coming Soon)
**How will tokens be distributed?**
There will be a small $SWAN token sale on the Oxbull launchpad platform that will allow us to provide the initial liquidity for the token at launch. From there, the remaining tokens will be distributed through staking pools to allow for equal and ample opportunity to get the token early.
**Why would I provide liquidity and participate in the Blackswan Lake instead of just holding the token?**
While we do expect speculative traders to enjoy trading $SWAN due to its unique expected price action, a majority of $SWAN users will find better hedging protection by participating in the Blackswan Lake in order to receive benefits from the Blackswan Fund during periods of contraction. Blackswan Lake rewards will be extremely aggressive to incentivize the purchasing of $SWAN tokens by users trying to join the Lake.
**Why does the supply of Blackswan Tokens increase when above equilibrium liquidity?**
$SWAN supply increases during periods of high liquidity to incentivize growth of the token regardless of the stability caused by the high liquidity of the token. It may be difficult for large swings in price, so supply expansion helps supplement market cap growth and wealth for users.
**What happens if the Blackswan Fund runs out of money?**
If liquidity does not return to the market during the Blackswan Funds aggressive rewards, then all of the Blackswan Fund will get distributed in the reward schedule shown above in the whitepaper. Funding will eventually return to the Blackswan Fund when demand increases for the $SWAN token utility, or ecosystem profits accumulate.
**How does the Blackswan Fund get stablecoin and Blackswan tokens?**
During periods of high liquidity, a percentage of Blackswan token supply expansion is sent to the Blackswan Fund, where it is slowly sold over time into stablecoin. Due to the high liquidity, this will cause minimal price impact and is similar to an insurance premium that is slowly paid over time in order to stay safe during periods of uncertainty.
The longer the token sustains high liquidity, the larger the Blackswan Fund will get.