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Summary
- Safemoon was launched three weeks ago and has grown by 2,900% since then.
- Safemoon is a decentralised finance token, which means that anyone can trade it without an intermediary such as a bank or a broker.
- Despite its recent steep surge, investors are being urged to conduct thorough research before choosing to invest.
A new cryptocurrency, known as Safemoon, has grown an astounding 2,900% since its launch three weeks ago, with the price rising a further 27.5% in the past 24 hours.
While it is still valued well below the one-dollar threshold, Safemoon currently has around 800,000 holders and a market cap of US$4.27 billion (~AU$5.52 billion).
Safemoon is a DeFi Token
Technically, Safemoon is not a cryptocurrency. Instead, it is classified as a DeFi Token. ‘DeFi’ is short for ‘decentralised finance’, which is a blanket term for financial products available to access on a public decentralised blockchain network. This essentially means that it can be accessed by anyone without the middleman of banks and exchanges.
Safemoon says it penalises those who choose to sell it early with a ten per cent fee of the selling price charged to the seller. On the other hand, Safemoon claims to reward those who hold on by redistributing five per cent of the money gained by penalising the sellers. Its Facebook page states:
For this marketing strategy to work well, it requires buyers to keep buying to keep the price up. This makes it a very risky investment.
INTERESTING READ: A glance at five Important Cryptocurrencies other than Bitcoin and Ethereum
Source: © Kviztln| Megapixl.com
What is the Basis for Growth?
While Bitcoin had its single biggest drop in months last Sunday, Safemoon recorded a 99% rise.
Indeed, Safemoon’s success comes on the back of a steep rise of a number of other cryptos, including Bitcoin and Dogecoin, which has risen a staggering 18,000% from a year ago, despite being started as a joke satirising other cryptos. In fact, Safemoon’s slogan, “Safely to the moon”, is based on a phrase made popular on the subreddit WallStreetBets, which attempted to hype up the price of Dogecoin.
Moreover, the Initial Public Offering of the crypto exchange platform, Coinbase in the US last week, has likely helped boost the value of other altcoins, including Safemoon.
GOOD READ: Coinbase Valuation Tops US$100 Billion on IPO Debut
Investors Beware
Despite its astronomical rise since its inception, little else is known about Safemoon and thus investors are encouraged to be cautious.
Its relative obscurity, as well as the unregulated nature of cryptocurrencies, has led to Safemoon’s founders holding ‘Ask Me Anything’ sessions to reassure potential investors of its legitimacy.
Buying Safemoon
Although Safemoon is not yet listed on any exchanges, users can buy Safemoon by setting up a crypto wallet on the Binance Chain and add Binance coins (BNB) to that account. Then users can swap BNB for Safemoon tokens.
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