This article is an in-depth technical breakdown of Swap & Evolve. Click the image below for the simplified explanation of Swap & Evolve
Understanding the LP Growth
When SafeMoon launched in March of 2021, it introduced a lot of features to the DeFi Space not seen before. Among those features was a feature called Swap and Liquify.
Swap and Liquify's function takes away and stores a portion of the 10% SafeMoon tokenomics fee. Once this stored amount hit 500B (SFM V1) or 500M (SFM V2) it's triggered. Half of that SafeMoon was turned into BNB (SafeMoon’s native token/coin) and paired with the remaining 250M/B SafeMoon. So you would have 250B/M SafeMoon paired with the BNB value equivalent at that time.
Swap and Liquify had its advantages and disadvantages. The main disadvantage of its function was that it caused a drop in SafeMoon's price after being triggered. During times when the volume was low, this really made a visible impact. So while the token was generating liquidity, which is ultimately a good thing, it slowed the overall growth in token worth. As a result, the team has provided an evolved solution to S&L, Swap and Evolve!
What is Swap and Evolve?
Let's consider what exactly it's replacing or, in this case evolving from, which is Swap and Liquify.
In its simplest form, Swap and Liquify 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). Once those values were reached it triggered the contracts function swapAndLiquify.
But what happened when it triggered? It split the 500B/M SafeMoon down the middle, turned 250B/M SafeMoon into BNB, and then paired them together adding to the liquidity pool. Now from face value, this seems great. You're essentially providing more liquidity to the liquidity pool. However, it has a trade-off. When half of the SafeMoon is turned into or swapped for BNB it decreases the token value, negatively impacting SafeMoon’s token growth.
So how do we prevent the major negative impact?
Swap and Evolve!
Swap and Evolve is an evolved state of Swap and Liquify. The basic premise is to remove the major negative impact and instead apply a positive one. This is achieved via two functions on the SafeMoon Contract:
This function is the method by which the contract is able to collect the native coin (BNB). It does this by collecting SafeMoon. At every 323,232.32 SFM Collected it will swap these tokens for the native coin. This native coin is then stored until the set trigger value of swapAndEvolve is reached.
Once the contract has collected and stored 132.32 BNB, the swapAndEvolve function will be manually triggered. This trigger will take the set value collected of 132.32 BNB and purchase -on the open market- 66.16 BNB worth of SafeMoon, pair that 66.16 BNB worth of SafeMoon with the remaining 66.16 BNB, and then place that into the liquidity pool.
How is this different from swapAndLiquify?
At first glance, it might not be obvious how this is different. So let us look to break it down and compare the differences.
The biggest issue with swapAndLiquify was its huge negative impact on the charts when it was triggered. So in order to first combat this, swapAndLiquify or the newly renamed collectBNB was reduced from 500M SFM collection to 323,232.32 SFM collection. By doing this reduction on the collection, it prevents that negative impact on the charts. While there is still a swap of SafeMoon to BNB it isn't affecting the charts as harshly as before. In addition, when the volume levels are low it will NOT create that large imbalance because instead, it will be utilizing a smaller BNB collection.
Once collectBNB has collected the full 132.32 BNB then swapAndEvolve will be triggered. This will cause a positive impact on the charts by taking 66.16 BNB and purchasing SafeMoon from the open market. Once purchased, the SafeMoon will be paired with the remaining 66.16 BNB and placed into the liquidity pool. As we know, having stronger liquidity helps the longevity of the token, the project, and the company.
Why do we swap to collect BNB/Native Coins?
As mentioned previously the disadvantage of swapAndLiquify V1, was that swapping that large amount of 500B/M SafeMoon to BNB, although to grow the liquidity pool, had a negative impact on the token.
So by first reducing the amount that is stored/swapped you lessen the pressure on the charts This also works in the community's favor when in times of low volume. As during swapAndLiquify V1 in times of low volume, it was hard to outweigh the SafeMoon to BNB swap pressure when it triggered. Whereas with collectBNB at 323,232.32 SFM, the pressure created from the swap is tremendously lower than before meaning lower volume can look to outweigh that pressure.
The collectBNB is just the function that allows the whole swapAndEvolve to operate and isn't a direct part of Swap and Evolve. Once we have 132.32 BNB collected via collectBNB, the swapAndEvolve function will be triggered which takes 66.16 BNB and buys SafeMoon, pairs that with the remaining 66.16 BNB, and places the pair into the SafeMoon Liquidity Pool.
So with both functions, collectBNB and swapAndEvolve running in conjunction with each other, it resolves swapAndLiquify V1 biggest problem by replacing the large SafeMoon to BNB swaps with smaller more controlled swaps. Also with the addition of the large buy, a positive impact is created.
It is important to note that collectBNB collection amount is changeable based on market circumstances
Below is a flowchart of the SafeMoon contract Tokenomic fee distribution breakdown including Swap & Evolve.
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?
Collection of BNB is every 323,232.32 SFM, while the trigger to S&E is every 132.32 BNB
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. Can't you just collect BNB directly and not create a swap of SafeMoon?
Unfortunately not. This is more of a blockchain/contract limitation where the Token contract can not collect anything other than the token itself. This is why we need to create a swap in order to get the native token.
If you have any further questions, please read our Knowledge Base here.