Black Swan Events

In financial markets, contagion risk is generally triggered via black swan market events, which are prohibitively difficult to predict. During a black swan event, the market faces immense selling pressure against limited demand, causing the prices of tokens to drop in dramatic fashion. Despite the crypto market being only 15 years old, it has faced at least one black swan event with the COVID pandemic. If a black swan event were to occur again, then the restaking market would not be immune to its impact. Restaking is a new primitive of crypto-economic security, which is derived from the strength of the market cap of each underlying blockchain that it serves. The higher the market cap, the stronger the crypto-economic security. A reduction in market cap would lower the crypto-economic security of the restaking system.

Wherever possible, Exocore attempts to utilize appropriate risk mitigation techniques and/or thoughtful design to prevent contagion risk. For example, by design, Exocore is an omnichain restaking protocol, so it isn’t dependent on any individual blockchain to function. If an issue arises within one of the blockchains that Exocore supports, then it would not effect the entirety of the Exocore system. Instead, the risk would be isolated to that specific blockchain, and once the issue was resolved, then Exocore would resume supporting it.