What the Heck is SafeMoon and Why Its Price is Rocketing?

What the Heck is SafeMoon and Why Its Price is Rocketing?
What the Heck is SafeMoon and Why Its Price is Rocketing?

Belgium (CoinChapter.com) — As new cryptocurrencies come to market nearly every day, it can be challenging to distinguish one from the next. SafeMoon is a project currently gaining a lot of attention, primarily in the price department. Is there anything to warrant excitement, or will this be another fad? 

Penalizing Dumpers Is Similar To MLM Schemes

Interestingly, it may be a lot more complex to figure out what SafeMoon is or why it exists. As a DeFi token, its goal is to reward people who buy and hold the asset. However, for those who attempt to sell the asset, there will be a penalty to contend with. It is a different take on incentivizing users to hold, although penalizing those who want to sell is an awkward approach.

Although it makes sense to prevent pump-and-dump schemes in the cryptocurrency world, this approach may not necessarily be viable. It would help explain why the price is going up lately, as no one can sell assets without facing a penalty of sorts. With a fee of 10% of the amount being sold, one needs to establish significant profit. On paper, this will prove to be unsustainable in the long run unless there are more use cases for this token in the future. 

Interestingly enough, holding on to the token is not entirely without risk either. SafeMoon will distribute $5 of the penalty charges to holders. However, if no one sells — or feels comfortable to sell — those fees might not necessarily contribute much. This approach is very similar to multi-level marketing, a business model that meets plenty of criticism, despite being a viable business approach. 

SafeMoon Price Performance Raises Questions

It is interesting to see how SafeMoon performs over time. The past 30 days have yielded a gain of nearly 4,300%, yet the momentum is crashing down fairly quickly. There is a lot of market impulse involving this currency. It has already seen a significant decrease in value. Although the sentiment will remain choppy for the foreseeable future, it remains unclear whether there is much future price potential.

SafeMoon price performance. Source: CoinGecko
SafeMoon price performance. Source: CoinGecko

Considering the penalty for selling tokens, there will always be a limit to what will be possible. There are also some questions regarding the circulating supply, as the total supply appears to be capped at 1,000,000,000,000,000 SAFEMOON. A crazy amount, even under the best of circumstances, and one that raises many long-term viability questions. 

It is currently only possible to trade SAFEMOON on a few platforms, including MXC, PancakeSwap, and BitMart. As is often the case where new tokens are concerned, it may take a while for more prominent platforms to adopt this currency — whether or not they will do will heavily depend on whether there will still be an interest in this currency a few weeks from today. 

Should You Buy SafeMoon?

It is impossible to determine whether one should acquire SAFEMOON or not. Many questions are surrounding this project, and some of them cannot be answered right away. That is not entirely uncommon where new currencies are concerned, although many people prefer transparency first and foremost. 

Some Reddit users are not too pleased with the overall concept either. Many people actively raise questions about the real purpose of this project in the long run, yet they may not find the answers. Additionally, there is a sheer lack of use cases for this asset beyond speculation, which isn’t looking too promising. Calling it a “Ponzi scheme” is a bridge too far, but many questions cannot be overlooked. 

Closing Thoughts

It is not uncommon to see new tokens hit the market and spark significant price momentum right away. More often than not, however, these tokens tend to lose momentum quickly, leaving many investors behind. It is unclear if Safemoon will go down a similar route, although its “penalty” mechanism may not necessarily be sufficient to keep holders engaged for long. 

It is always advisable for investors to conduct their own research before making any investments. In this particular case, it is challenging to dig up most details, albeit that situation will hopefully change for the better soon. For now, it may not be the best investment, especially if one is risk-averse. All of the unknown factors are worrisome, regardless of how one wants to look at them.

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