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Economic Model

pSWAN's economic model ensures solvency and incentivizes growth through an automated, utilization-based approach:

  • Core Invariant: pSWAN_total_supply <= SWAN_amount + delegated_amount + liquidating_amount
    • This ensures each pSWAN is always redeemable for 1 SWAN token
    • SWAN_amount: Balance in liquidity pool
    • delegated_amount: SWAN tokens delegated to service providers
    • liquidating_amount: Tokens under liquidation (exempt from rate calculation)

Key Components​

  • Utilization-Based Miner Rate:
    • Rate automatically adjusts based on pool utilization
    • Utilization = delegated_amount / pSWAN_total_supply
    • Minimum rate: 30% at utilization 0%
    • Jumping point: 90% at utilization 80%
    • Maximum rate: 200% at utilization 100%
Interest Rate Model
  • Collateral and Liquidation:
    • Collateral factor: 80% - amount of the collateral that can be used for delegation request
    • Liquidation threshold: 85% - threshold of LTV (loan to value) for liquidation
    • Example
      • CP with an account of collateral 100
      • Max delegation it can request for is 100 * 80% = 80
      • If CP requested max 80, overtime as the interest accrues, and it never repay such that requested amount exceeds 85 (100 * 85%), liquidation starts
      • Procotol will stop the agent, start the process of withdrawing the collateral and return the delegation

Bootstrap Process​

For new service providers without existing collateral:

  1. CP deposits initial amount (e.g., 20 SWAN)
  2. Requests delegation for additional amount (e.g., 80 SWAN)
  3. Combined amount used to set up node (100 SWAN total)
  4. Bootstrap value tracked on-chain

This enables CPs to start with lower upfront capital while maintaining protocol safety through collateral requirements and automated rate adjustments.