SafeMoon: A Volatility Solution or a Crypto Bubble?

Business | Business | 18.01.2023
4 minut(es) read

SafeMoon is a DeFi protocol that operates in the Binance Smart Chain (BSC) network and provides automated liquidity generation. The name contains the phrase — “safely to the moon.” The project was launched in March 2021 and caused some stir in the crypto market. One of its founders and CEO of the project is John Karony, who previously worked as an analyst for the U.S. Department of Defense. 

Why SafeMoon Is Such a Big Deal, and What Developers Were Up To

SafeMoon: A Volatility Solution or a Crypto Bubble?

The SafeMoon project was designed to solve one of the fundamental problems of cryptocurrencies, i.e., volatility. The idea is to encourage SAFEMOON token owners to hold the asset rather than trade it. On the one hand, it seems tempting, but on the other hand, why have a currency that is expensive to use? When selling SAFEMOON, its owner loses 10% of the transaction amount as a commission. The developers thought such a business model could save the project from volatility.

2021 turned out to be one of the best years for crypto startups, with investors buying up assets without delving into the projects. SafeMoon won popularity thanks to a successful project launch period and celebrities’ help. 

On March 11, 2021, the SAFEMOON token began trading, starting at $0.0000000004. The asset price reached its peak of $0.000011 on April 21. By that time, SAFEMOON increased by 2,749,900%. At the time of writing (December 23, 2022), CoinMarketCap data showed that the coin was worth around $0.0000005 — by that point, the token had lost 99.94% of its value and was trading below its peak at 1,864 times. The daily trading volume was $208.   

Second Attempt: SafeMoon V2

SafeMoon: A Volatility Solution or a Crypto Bubble?

The project’s developers paid influencers, such as YouTube blogger Ben Phillips, with SAFEMOON coins. These celebs urged their audiences to invest in the token. When the price started to go up, they gradually devastated their wallets. Rumor has it that Phillips alone made about $12 million on pumping this project.

The overall fall of the crypto market in May 2021 caused SAFEMOON to decline, as projects with no real value began to burn out. SafeMoon received negative reviews from major publications, and that pushed the token’s price down. 

In December 2021, the developers unveiled a new version of the project — SafeMoon V2 with an SFM token. The total supply of the asset is 1,000,000,000,000 tokens, with just over half of the issuance currently in circulation. On December 16, 2021, the coin was worth $0.0016 at launch. It peaked a couple of weeks later, trading around $0.0029. As of December 23, 2022, SFM was $0.00022, ten times lower than its peak and six times lower than its initial price. The daily trading volume was $377,000.

The token differs from the previous one in the following ways: 

  • Smart contracts can be added to the white list, then the transaction fee is reduced from 10% to 2%. This makes it possible to use the token in more ways than just storing it. 
  • V2 is more secure against cyberattacks.
  • The token is designed to be autonomous, with more liquid pairs and controlled liquidity. 

In late December 2021, the developers urged SAFEMOON holders to switch to SFM V2. Now, SAFEMOON is no longer supported, with a 100% fee for trading it. The option to migrate is still open, but the developers bear no responsibility for the safety of tokens.  

In February 2022, SafeMoon investors filed a lawsuit in California court against representatives of the project and some celebrities, including singer Nick Carter, rapper Soulja Boy, and YouTube blogger Ben Phillips for urging them to buy SAFEMOON. The story resembles the classic Pump and Dump scheme used in the crypto market. 

Features of SAFEMOON & SFM Tokens

SafeMoon: A Volatility Solution or a Crypto Bubble?

The protocol of SafeMoon and SafeMoon V2 has two components: RFI tokenomics and an automated liquidity generation protocol. 

RFI is short for Reflect Finance. RFI tokens charge a fee for each transaction, which is automatically distributed to holders of such a coin. Automated liquidity generation, in turn, means that commissions for transactions are automatically sent to a liquidity pool. 

Trading. When you sell SAFEMOON or SFM, a 10% commission is charged, of which: 

  • 4% is sent to the owners of the coin; 
  • 3% is sent to the liquidity pool; 
  • 2% is burned; 
  • 1% is allocated for ecosystem development. 

Asset transfer. Milder conditions are set for SAFEMOON transactions between cryptocurrencies. In this case, the fee is 2%, of which 1% is distributed among the coin holders and 0.5% is sent to the liquidity pool and for ecosystem development. 

As for the new token SFM, its tokenomics and main function remain the same. The key difference between SFM and SAFEMOON is the ability to reduce the amount of transactions, as mentioned earlier.  

SafeMoon on Social Media

SafeMoon: A Volatility Solution or a Crypto Bubble?

The subreddit /r/SafeMoon had about 299,000 members at the time of writing. The community was created on March 7, 2021, four days before the project’s launch. It’s safe to say that Reddit communities are among the most influential and active in the crypto industry. The project’s developers used all possible tools to promote and attract investors. However, after the hype around the project died down, moderators’ attempts to keep a dialogue with community members seemed unsuccessful, as evidenced by the low karma of posts and almost no comments. 

SafeMoon’s Twitter account with about 1.3 million followers is more active. The project also has a separate educational Twitter account with over 4,000 followers. SafeMoon representatives have been running a YouTube channel since early 2022, and its audience today is around 25,000, with subscribers actively watching and commenting on the videos. Content features Sales Manager Hayden Wing and CEO John Karony. The videos are out almost once a month. The project has about 108,000 followers on Instagram and more than 98,000 members on Discord, though activity is quite low there. All data are relevant as of December 2022. 

SafeMoon: To the Moon or to Rest? 

SafeMoon: A Volatility Solution or a Crypto Bubble?

Aside from the token, the project offers a custodial crypto wallet and a credit card option, which hasn’t been released yet, but users can join a waiting list. The team is also working on a cold wallet and its own exchange. 

There’ve been rumors that SafeMoon developers plan to release an NFT collection. But so far, SFM continues to fall, and investors, judging by the comments, don’t have any more trust left. As long as the whole tokenomics of the project is built around SFM, it’s hard to imagine the development of SafeMoon. There’s a feeling that the team and the project itself are slowly sinking into oblivion.

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