Hundreds of new cryptocurrency tokens are listed every day. Except for a few, most of them fail in gathering any following or trading volume. Plus, the rise in the numbers of new exit scams and rug pulls are at an all-time high, which adds to the difficulty for a new coin to succeed. However, amid all of this chaos, Safemoon, a very new DeFi project, has become the center of attention in all crypto-related news and discussion.
In this article, we will discuss the drama surrounding Safemoon, if it’s safe, and if you should invest in it. But before all of that, first, we must understand – what is Safemoon?
What is Safemoon?
Safemoon is a relatively new DeFi project launched on 8 March 2021, and it’s already ranking at 212 in terms of market dominance with a market capitalization of $880 million, according to Coinmarketcap. The circulating supply of Safemoon currently is 585 trillion. With over 2 million holders, the price of 1 Safemoon is currently $0.0000014. Although it’ll take a long time before Safemoon reaches 1 cent, the pace at which it’s growing is really impressive, considering it just started a few months ago.
As for the technical side of things, Safemoon crypto is a BEP-20 token built on the Binance Smart Chain protocol (BSC). The difference between Binance Smart Chain and other protocols is that BSC uses a Proof-of-Authority (PoA) mechanism to validate blocks, which is unique to BSC only. In the Proof-of-Authority system, block creators are called Validators.
Binance chooses and approves these Validators themselves, making it a centralized finance system. The criteria to get approved as a Validator on Binance Smart Chain is one has to verify their real identity and invest money to prove long-term commitment. This is completely different from the Proof-of-Work (PoW) system, where block validators can choose not to disclose their identity and stay anonymous.
Another major distinction between Proof-of-Authority and Proof-of-Work is that in PoA, every Validator is equal, while in PoW, the first one that solves a complex mathematical problem and validates a block will get the reward.
What Makes Safemoon Unique?
Now that we know what Safemoon is. Let’s find out what makes Safemoon unique and distinct from every other DeFi token. Safemoon has three core components, which makes it stand out.
Safemoon claims long-term stability, and its automatic liquidity pool is the secret to that claim. Traders are charged a 10% fee every time they make a transaction, which gets split into two halves. One-half of that 10% is put back into the liquidity pool, encouraging holders not to sell their coins while also preventing whales from dumping coins. This system provides an overall stable price floor for traders.
Unlike Safemoon, most coins and tokens like Bitcoin have a continuous burn mechanism that creates scarcity in the market and helps drive the price and demand higher. However, Safemoon doesn’t feature a continuous burn mechanism. Instead, Safemoon does burn its tokens manually and publicly. They also let everyone track the number of tokens burned so far on their official website. According to the website, more than 424 trillion tokens have been burned so far.
In most coins like Bitcoin, the reward value decreases as the number of coins in circulation increases. This allows early adopters to buy more crypto for the same price as those who came later would pay for far less crypto. Safemoon attempts to solve this problem by introducing a different reward system called static reward, or reflection.
Remember the 10% fee charge we talked about, half of which goes back into the liquidity pool. Well, if you’re wondering where the other 5% goes, it gets distributed among the token holders, creating a stable ecosystem. Once again, this encourages early adopters not to sell their coins, solving the downward sell pressure.
The Drama Surrounding Safemoon
On paper, the Safemoon crypto seems like the perfect token, but the ground reality is very different. Recently, Safemoon has been under fire for multiple reasons. As of now, the entire crypto community seems to have split into two groups. One group is almost certain that Safemoon is just another exit scam or rug pull, while the other group, the passionate Safemoon “army,” is doing everything to defend allegations and prove why Safemoon is the next big thing.
However, the controversy around Safemoon is nothing new. The skepticism that Safemoon is just another rug pull type of scam has been there since the beginning. But only recently, after three failed attempts from the developers of the token to launch the Safemoon Wallet, along with two other products, did the Safemoon drama gain a lot of momentum. Twitter has been flooded with the hashtag “Safemoon” for the last few days, and it’s the most trending topic for discussion in every crypto forum and community.
The developers of the token are claiming that there have been some unforeseen technical difficulties and glitches that are preventing a successful launch and say that there is nothing to be worried about and asks everyone to be patient. On the other hand, the opposing group is still claiming that Safemoon is just another Ponzi scheme.
One of the allegations that have gained a lot of eyeballs lately, pointed out by a Reddit user, u/TNGSystems, claims that “Safemoon has been exploited from day 1 and $68,460,000 have been siphoned out of the liquidity pool.” See the post and what people are saying about this allegation. We will talk more about this, the main source of this allegation, and what the Safemoon “army” is saying in defense in the next segment of the article.
More rumors have been coming in claiming that a few of the founding developers of Safemoon have left the project, which includes Hank, Jack, and Thomas, but there is no evidence if this rumor is actually true. However, on Sunday, an allegedly leaked audio clip of Hank got out on Twitter. In this five-minute-long audio clip, you can hear Hank (supposedly) talk about releasing a rival token to Safemoon.
Not just that, but the entire conversation on that audio clip puts Hank and the entire Safemoon team in a very suspicious light. However, once again, many people come to the defense, saying that it’s a good thing Hank left because he was a rotten apple suggesting that Hank is the only one in the group with the wrong intentions, while some are saying that it could be a deepfake audio.
Shortly after, a screenshot started circulating where a discord user, who supposedly works for the Safemoon team, can be seen to confirm that it’s indeed a real audio clip but from a conversation that happened four months ago. The user continues by saying Hank was drunk and angry then because he wasn’t compensated on time and further assured that there is nothing to be worried about.
From what it seems, Safemoon is in a very precarious position right now. While some people are totally convinced it’s a scam, others still believe there is nothing wrong. As of now, it’s hard to conclude anything without solid evidence. For the time being, we just have to wait and see how the story develops in the coming days and weeks.
Is “Safemoon” Really Safe?
To answer the question, if the Safemoon crypto is really safe or just another scam, first, we have to look into the past work history and track record of the developers of the Safemoon token. Developers with good connections, reputation, and credibility in the crypto space are usually the ones we should trust. However, the contrary doesn’t necessarily mean it’s a scam. It just means we need to be more cautious with our decisions. Check out this article about rug pulls to learn how to spot one.
The founders of Safemoon include six individuals, all connected prior to the project in some way or another. The CEO of Safemoon, John Karony, previously teamed up with Thomas Smith and Trevor Church, the CTO and Community Manager of Safemoon, as the founder of a game studio called TANO, which stands for Technically A New Operations.
Similarly, the VP of Research and Development in Safemoon, Henry “Hank” Wyatt, also has a similar history with Safemoon’s web developer, Jacob Smith, as Jacob Smith worked as the lead web developer for a game development company founded by Hank.
However, both the websites for TANO, founded by John, Thomas, and Trevor and the other game development company founded by Hank, leads to an error. It’s hard to tell if they ended the project or haven’t started it yet.
All six members have some degree of work history in web development, game development, or general management. However, only Thomas Smith has the most established work history of working in different companies as a software engineer, while Hank is the only one with a four-year degree.
Judging by their work history and track record, it’s hard to make a judgment. But at the very least, we can say that it’s a bit too vague.
Apart from researching the founders, there are other ways to know if a DeFi token is involved in some shady business. One of them is auditing. There have been several audits done on Safemoong, but the one that got the most attention was by Doxxlockers. It’s the same audit that Reddit user u/TNGSystems pointed out in their post.
This audit does contain some reports that are somewhat suspicious and raises several questions. But then again, the Safemoon community defends these reports by saying that the team at Doxxlockers are biased and accused them of shilling their own token.
Should You Invest in Safemoon?
It’s not fair to completely write off Safemoon as a scam, neither saying that it’s totally safe because honestly, no one knows for sure yet. Everyone is just speculating. With that being said, some people are going absolutely wild with the Safemoon hype. They are investing large amounts of money. Some are even investing their life savings, believing that Safemoon is the next big thing and will make them rich. That’s nothing but an uninformed and reckless way of investing your money.
It’s totally fine to take risks, but only calculated risks. The same applies to Safemoon as well. So, even if you do decide to try your luck and jump on the bandwagon of investing in Safemoon, remember this golden rule of investing – only put what you’re willing to lose.
To buy the Safemoon crypto, go to the crypto exchange, Binance. There, you have to buy Binance coins, which you can then exchange for Safemoon tokens.