SafeMoon is one of the newest and fastest-growing altcoins, even in the crazy cryptocurrency market that’s seen a good number of tokens increase in value by thousands or even tens of thousands of percent in 2021.
Launched on March 8, 2021, it is a BEP20 token that exists on the Binance Smart Chain. It’s also quite unusual in a world of cryptocurrencies trying to reduce transaction fees to promote trading because it actually taxes sellers, thus penalizing users for trading the token.
In some respects, it seems like SafeMoon is following the same approach to cryptocurrencies that value investors like Warren Buffet and Charlie Munger take to stocks. That is to follow a buy and hold philosophy, where those who hold the longest receive the greatest rewards.
The development team hopes this approach will help cryptocurrencies move away from the wild west perception they currently have. As it says on the SafeMoon Facebook page:
Remember, getting to the moon takes time, and the longer you hold, the more tokens you pick up.
With the prospect of infinitely increasing token generation (so long as you don’t sell), and with a price that’s jumped thousands of percent in just under three months, and a unique take on rewarding investors, it’s no wonder the project has attracted a good deal of attention.
Chances are it’s caught your attention too, which is why you’re here. If you are considering adding SAFEMOON to your holdings, then read on and be sure to take your grain of salt.
Remember that cryptocurrencies are inherently risky investments, even the oldest and most stable. New projects like this can create new fortunes almost overnight, but they can just as easily crash and burn. So make sure you never invest more than you are able to lose and be sure to do your research and due diligence before making any investment.
That said, maybe you’re just here because you’ve heard the hype over SafeMoon and just want to learn more about what it is and what problem it solves. If that’s the case, then read on.
What is SafeMoon?
SafeMoon is an altcoin created on the Binance Smart Chain. It was launched on March 8, 2021, in a fair launch where the devs burned all their tokens and participated in the coin offering just like everyone else. In the short time SafeMoon has been in existence, it has added nearly 2.5 million users to its protocol while burning over 40% of the total token supply.
What Problem does SafeMoon Address?
With the explosion of DeFi has come the problem of impermanent loss. Because so few investors understand the mechanisms that create impermanent loss, many have been sucked into the high APY yield-farming trap. It’s not surprising.
Seeing an APY of 100% or greater brings out the greed in most of us. But unfortunately, what inevitably happens is the greedy trader gets pushed out by early investors who collect their profits and create the bursting of the valuation bubble.
Due to this dynamic, the adoption of static rewards, also known as reflection, is gaining increasing popularity. Reflection seeks to eliminate the problem of impermanent loss caused by yield-farming.
And SafeMoon uses three simple functions in each trade to combat impermanent loss and create a better protocol. These are Static Rewards (Reflection), Manual Token Burns, and Automatic Liquidity Pools.
Static Rewards
The SafeMoon developers feel that using static rewards, also known as a hold-farming model, can solve several problems associated with yield-farming. For one thing, because the reward amount is conditional on the trade volume of the token, there is a reduction in selling pressure of the token caused by early adopters selling tokens after farming the insanely high APYs.
Secondly, the mechanism is an incentive for users to continue holding their tokens, thus collecting an even greater number of tokens, similar to the way dividends work for stockholders.
The rewards work like a type of auto-compounding that doesn’t require the user to actively hunt for yields, incurring transaction fees along the way. In addition, large wallets with exchanges, dapps etc., are excluded from getting the rewards, incentivising individual wallet holders to contribute, thereby making the system more decentralised and less prone to whale activity.
Manual Burns
Burns have been used by a number of protocols, and sometimes they can make a difference, but not always. For example, continuous automated burns tend to have a positive impact in the project’s early days; however, the effect slowly loses its momentum since the burn can’t be controlled to maximise its impact.
By contrast, a burn controlled by the team and based on project achievements can help keep community engagement high and the impact on the token just as high. In addition, Crypto communities appreciate the transparency that comes with advertised burns that can be tracked.
SafeMoon has implemented a burn strategy that’s meant to benefit the community in the long term. This is achieved by distributing some rewards to a public burn address. The community is fully informed regarding the burns, and the total amount of tokens burned is always located on the homepage of the SafeMoon website, making it a simple task to identify the circulating supply at all times.
Who Created SafeMoon?
The token is run by a group of six that all look to have some degree of previous work history together.
According to LinkedIn profiles The CEO, John Karony, CTO, Thomas Smith and Community Manager, Trevor Church, founded and worked together at an indie game studio called TANO, an acronym for Technically A New Operation.
TANO's site only has the words "Alpha Launch Coming." So it's unclear if this is a functioning business or something yet to come.
The CTO, Thomas Smith, has the most established work history of the group with various software engineering roles held at a number of companies.
The rest of the team seems to have varying degrees of experience in web development, game development or general management. Henry "Hank" Wyatt, SafeMoon's VP of research and development, also founded a game development company, according to his LinkedIn. Unforetunealty, the website leads to a 521 error from the host's end. SafeMoon's web developer, Jacob Smith, apparently worked for this game development company as well.
On Jacob Smith's LinkedIn he states that he "Worked as the lead website developer working on several of their projects. Work is on hold atm due to the lack thereof."
Henry Wyatt is the only team member to have earned a four-year degree. The rest look to have spent brief periods at universities or colleges.
While education or experience at larger companies is not prerequisites for creating a cryptocurrency, their previous work history and credentials seem a bit unclear. They promote SafeMoon on their Twitter accounts, which isn't that out of the ordinary from crypto project leaders, but it's hard to say how genuine the project is or how qualified they are.
VERDICT
SafeMoon has undoubtedly made some people quite rich in its first months of existence. Of course, that’s very attractive, but it is also how all Ponzi schemes get started and build momentum.
People learn of early adopters making 500% or 5,000% returns, and they get excited and pour their money into the scheme. Maybe it even keeps going for years, but eventually, all Ponzi schemes go bust.
As it stands, SafeMoon has no utility other than to make money. And that only works if people remain excited and the token’s price continues rising. Only you can decide if that’s a risk you can afford to take. Because you could end up holding a bag of worthless shitcoins.
On the other hand, the team has said they have plans to provide utility to the platform. Linking it with online gaming could undoubtedly bring in tens of millions of new users, but keep in mind that already well-established projects are tackling the online gaming vertical.
There’s no lack of ambition for what they want the ecosystem to encompass, what with a DEX, an NFT marketplace, and even a cold wallet, not to mention the many initiatives under Operation Phoenix. However, given the team they have assembled so far, I do have my reservations about how much of that can become a reality. Also, how actively are they pursuing commercial entities to accept SFM in their daily operations?
And then there are the smart contract vulnerabilities that have been uncovered that certainly do point to the likelihood of a rug pull at some point in the future.
Yes, you might make money with SafeMoon, but you might get burned as that rocket tries to shoot to the moon too. So be careful out there, folks.
