Swap and Evolve: Understanding the LP Growth
When SafeMoon launched in March of 2021, it brought with it a lot of features to the DeFi Space, that the community of DeFi hadn't really seen before. Among those features was a feature called Swap and Liquify.
Swap and Liquify's function is to take away and store a portion of the 10% SafeMoon tokenomics fee. Once this stored amount hit 500B (SFM V1) or 500M (SFM V2) it triggered selling half of that SafeMoon for its native token/coin which, in this case, was BNB. After selling half of the SafeMoon, it would then pair the two together. So you would have 250B/M SafeMoon paired with the BNB price equivalent at that time. Swap and Liquify had its advantages and disadvantages. The main disadvantage with its function was that it caused a drop in SafeMoon's price after triggered and during low volume this really showed because the volume wasn't as strong to continue the growth. So while the token was generating liquidity, which is ultimately a good thing and what it's purposed to do, it slowed down the overall growth of the project. As such the team has now provided an evolved solution to S&L, Swap and Evolve!
What is Swap and Evolve?
Let's consider what exactly it's replacing, which is Swap and Liquify. Swap and Liquify, in its simplest form, collected a percentage of SafeMoon via its 10% tokenomics fee. The LP % it takes depends on the type of transaction. (See our Knowledge Base for further understanding of the tier system.) The percentage it collected was then stored until it was a value of either 500B (SFM V1) or 500M (SFM V2), which then triggered its function swapAndLiquify. But what happened when it triggered? Well, it split the 500B/M SafeMoon down the middle and sold 250B/M SafeMoon to BNB which you would then pair into the liquidity pool. Now from face value, this seems great. You're essentially providing more liquidity to the liquidity pool. However, it's at a trade-off of a huge sell which was a negative impact on the growth of SafeMoon token. So how do we remove the negative impact? Swap and Evolve! Swap and Evolve does the same thing Swap and Liquify does just without the negative sell. I'm sure everyone is wondering how.
Swap and Liquify: Buys: Swapped into SafeMoon first then took the LP tokenomics. Sells: Took the LP tokenomics first then swapped it into native token.
Swap and Evolve: Buys: Takes the LP tokenomics first then swaps it into SafeMoon. Sells: Swaps it into native token first then takes the LP tokenomics.
So you can see that it simply inverts the process. By taking the BNB before the LP tokenomics occur, they can now collect BNB, SafeMoon's native token.
Why do we want to collect BNB/Native Tokens?
If you look back at the disadvantages of S&L, you see that selling SafeMoon to grow the liquidity pool has a negative impact on the token while trying to grow the LP. So by collecting BNB we are able to grow the liquidity pool through buys instead of sells. So how do we buy exactly? Well by collecting the BNB this means that we are able to collect up to a trigger value of BNB. Once we hit this value we would then split the BNB in half just like S&L would with SafeMoon. From there we would then take half of that BNB and buy SafeMoon on the open market, which we would then look to pair with the remaining half of the BNB. Unlike Swap and Liquify, when Swap and Evolve triggers it instead creates a positive boost to the token since it is buying the SFM instead of selling it on the open market. So not only are we growing the liquidity pool, we are making a positive impact on the token.
Swap and Evolve Flowchart
As you can see from the above we are putting BUSD and BNB respectively into the V2 contract by converting (or buying) half to SafeMoon and keeping half as the native token before pairing into the liquidity pools.
This is just the beginning
The Swap and Evolve feature is just the start. Once you combine it with upcoming features it becomes a whole lot more effective.
On what level will Swap and Evolve trigger?
This has yet to be announced. Stay tuned for official announcements regarding this.
What happens to the current SFM tokens collected in the contract address by Swap and Liquify?
The current SafeMoon that was building up before the team looked to turn off Swap and Liquify is still sitting in the pot ready for the team to decide on the best course of action for these tokens.
If you have any further questions, please read our Knowledge Base here.