There are thousands of cryptocurrencies out there, with new tokens being launched regularly as well. Most people will have heard of the likes of Bitcoin, Ethereum, Ripple and a few others which are the largest in the world, but there are many others that could potentially be game-changers in the future, or could just as easily crash and burn with no impact on the crypto market whatsoever. While the majority of new and obscure tokens suffer the latter fate, there are some with a lot of potential that warrants keeping an eye on. Safemoon, which was only launched in March 2021, is one of them. This event aroused great interest in all gambling venues focused on cryptocurrencies.
If we are to be extremely pedantic and precise, Safemoon is not exactly a cryptocurrency. Rather, it is decentralized finance or DeFi token. The main aim of such tokens is to allow lending and borrowing activities to take place between people and institutions without needing a bank, thereby creating peer-to-peer networks. These are also based on blockchain networks in a similar manner to cryptocurrencies. With regard to Safemoon, there is an interesting feature that should theoretically help control volatility and provide some sort of a floor for its price. All sales of Safemoon are levied with a 10% fee, with half of that fee then being redistributed to all Safemoon holders. This should provide an incentive to hold on to the token, and therefore prevent the price from falling too much.
However, if we look at Safemoon’s recent price history, this does not seem to be the case. The token dropped by around two-thirds of its value late in April, going from $0.000015 to $0.000005 in the space of just an hour, even though it recovered to $0.000007 soon. There have also been wild price upswings as well -the token recorded a 99% rise on the day after Bitcoin had its largest single-day drop in months. Such volatility has been seen in other crypto tokens as well – Dogecoin is up by around 20,000% over last year and had also increased by 91% in 24 hours around the same time. However, Dogecoin recently also dropped by more than 30% in a few hours following Elon Musk’s appearance on the American TV show Saturday Night Live, where he appeared to downplay the token’s prospects. Dogecoin was always intended as a joke and a meme cryptocurrency, but it has provided some huge returns to investors over the last 15 months. Safemoon may not be in the same boat, but could potentially end up having a similar impact.
Safemoon has also proved to be quite popular in Australia, where there is a lot of interest being shown in this token. One of the concerns around this token is that the fee on selling means that Safemoon owners may always need new buyers to keep increasing the price, which is the classic example of a pyramid scheme, while if nobody buys the token, there will be no fees to share among all users, and this will definitely cause the price to drop rapidly. The token has also seen some wild swings in price – it had posted a gain of over 7000% from its listing price at one point, and thus it seems as though it is also subject to the general volatility of the crypto market, despite the attempt, through the penalty on selling, to try and control this to some extent.
It is also not the easiest to buy Safemoon, since it is not yet listed on any exchange. Interested traders have to first buy BNB on the Trust wallet, and then swap BNB for Smart Chain. After this, you will need to use PancakeSwap to convert your Smart Chain into Safemoon, with up to a 12% slippage buffer as well. This has definitely impacted its trading volumes, as it is still too complicated for most regular users to try out. We should see an increase in volumes if the token is listed for direct purchase on a crypto exchange, and that could be a factor towards reducing volatility as well with more investors and traders. However, Safemoon is still a very new crypto token, and so it will take some time before its long-term prospects can be understood and evaluated.