Switcheo is upgrading its SWTH token smart contract to transition to an inflationary token economic model. Under the new token contract, users can now withdraw unbonded SWTH from the TradeHub blockchain to the Neo blockchain, signifying Phase 1 of the TradeHub rollout. The update requires users to conduct a token swap.
In June 2020, Switcheo announced plans for a new monetary policy to increase the supply of SWTH from 1 billion to 2.16 billion tokens. Over a five-year cycle, 1.16 billion SWTH be released weekly, at a decreasing rate. In the first week, the block rewards will have an emission rate of 1.92% of the new supply, which will then decay by 1.65% each week.
In this new tokenomic model, SWTH will no longer be burnt by exchange operations but distribute inflationary rewards to token holders. Switcheo noted its logic as follows:
We feel the introduction of this new monetary policy is a significant improvement as it will better incentivize active usage of SWTH and will quickly reduce the floating supply of SWTH during the ramp-up period of Switcheo TradeHub.
Switcheo purports a token smart contract update is necessary to adequately represent the total token supply following the change in tokenomics. Additionally, the team claims the new contract improves compatibility with the Neo blockchain and DeFi protocols, such as Flamingo Finance.
SWTH token holders can swap out their old tokens for new ones by conducting one-way deposits to the Switcheo TradeHub. Once deposited to TradeHub, the old version of SWTH will be permanently locked in the deposit contract. Then, when a user withdraws SWTH from TradeHub, they will receive the upgraded token.
Switcheo notes that if users have “already transferred tokens to Switcheo TradeHub and do not intend to withdraw them to the Neo blockchain, nothing needs to be done.”
To prepare for the update, Switcheo plans to pause deposit, withdraw, and trading functionality for system maintenance from 1:00 pm to 2:30 pm (UTC +8) on October 23rd, 2020. Once updated, the new SWTH token will trade on the Switcheo non-custodial exchange against NEO, GAS, ETH, and DAI.
Further, Switcheo noted it will coordinate with custodial exchanges to help them conduct the SWTH token swap on behalf of their users.
The full announcement can be found at the link below: