Xank’s Extreme Volatility Safeguard (EVS)

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O ne crisp, spring day in April 2013, Bitcoin plummeted from $263 to $126. A 52% drop in just six hours. While such massive nosedives are uncommon, they do happen and can wreak havoc on the economies of both virtual and fiat currencies. We’ve seen other similar currency devaluations in Zimbabwe and Venezuela as well as in the cryptocurrency sphere. Because we live in an unpredictable world in which anything can happen at any given moment, we must prepare for the worst.

 

Extreme Volatility Safeguard (EVS)

The Xank Reserve always holds 15% of the total circulating supply to calibrate Stable Pay transactions. The price of one Xank coin will fluctuate in the hands of market forces, but for the most part, mild ups and downs are manageable for Xank’s autonomous reserve fund. If prices fall, the Xank Reserve will feed Xank coins to maintain the predetermined fiat value, but if prices fall drastically, the Xank Reserve may be depleted or be near depletion, rendering it incapable of calibrating Stable Pay transactions. To preserve Xank’s stablecoin functionality in times of turmoil, Xank will implement an Extreme Volatility Safeguard (EVS).

 Xank’s EVS, primary, secondary, and tertiary actors enter the scene to assist in network stability. They are the Xank TreasuryXank Voters, and Xank Redeemers.

Let’s see how this works.

First, if there is a 50% price drop in a single day, the Xank Reserve pulls Xank coins equivalent to 5% of the total circulating supply from the Xank Treasury.

In the event of a 70% price drop in a single day, the Xank Reserve pulls Xank coins equivalent to 5% of the total circulating supply from both the Xank Treasury and Xank Voters’ masternode collaterals (5% from the Treasury and 5% from Voters for a total of 10%).

If a 90% price drop is observed in a single day, then the Xank Reserve pulls Xank coins equivalent to 5% of the total circulating supply from the Xank Treasury, Xank Voters’ masternode collaterals, and Xank Redeemers Pool (5% from the Treasury, 5% from Voters, and 5% from Redeemers for a total of 15%). Thus, the Xank Reserve is functional even in the midst of extreme volatility.

In addition to boosting the Reserve’s supply, 30% of the Xank Reserve Pool(the Xank Reserve’s 15% of total circulating supply + the newly added 15% of the total circulating supply from the Xank Treasury, Xank Voters, and Xank Redeemers) is atomically swapped with the top 5 cryptocurrencies in terms market capitalization.

The atomic swap basket is as follows:

  • Top 1 market cap coin = 50%
  • Top 2 market cap coin = 15%
  • Top 3 market cap coin = 15%
  • Top 4 market cap coin = 10%
  • Top 5 market cap coin = 10%

In troubling times, such measures will be taken to ensure the full functionality of the Xank network. We hope these extreme scenarios never take place, but we want you to know that Xank is prepared for the worst.

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Cryptocurrencies and blockchain. Team member at xank.io

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