Starting 2022 with a bang, interest-paying decentralised finance (DeFi) token safemoon is trying hard to hang onto some of its gains although today's price of $0.000002121 is some 21% off its recent best.
Safemoon emerged in March 2021 as a community-focused decentralised finance (DeFi) token to challenge popular meme cryptocurrencies such as dogecoin (DOGE) and shiba inu (SHIB). Like the other memes it has built up a substantial following, the so-called Safemoon Army.
Its migration to version 2 is now complete and, says Safemoon offers several advantages.
What is safemoon and how does it work? What pushed the price higher in recent weeks and what is the outlook for the coin?
Safemoon aims to reward ‘hodlers’
The name safemoon is a reference to the phrase “to the moon” used on social media by cryptocurrency traders who are bullish about the price of dogecoin.
How does safemoon work? The cryptocurrency is a yield-farming DeFi token that runs the SafeMoon protocol on the Binance Smart Chain (BSC). Yield farming is a process by which crypto investors are rewarded with interest payments in the form of extra tokens, in much the same way as a bank pays interest or a stock pays dividends. DeFi tokens make use of smart contracts that run on blockchains to provide decentralised services.
The protocol is based on three functions, which it refers to as reflection, liquidity pool (LP) acquisition and burn, according to the official website. The reward mechanism for holding safemoon tokens reflects the volume traded to encourage holders to keep their tokens, known as ‘hodling’ in the cryptocurrency market.
The contract adds tokens from sellers and buyers to the LP to create a price floor to support safemoon’s value. The development team burns, or destroys, tokens manually to control the supply in circulation.
What makes safemoon unique? Purchases and sales of the coin incur a 10% fee, which is redistributed as follows:
Safemoon updates attract investor interest
The safemoon price spiked by as much as 46,533% from the launch to peak at $0.00001399 on 20 April. The price then dropped back to $0.00000361 on 2 May, before rebounding to $0.00001039 on 15 May. But the crypto markets started selling off sharply towards the end of May and the price declined over the summer to $0.0000015 on 18 August.
The safemoon value started to rise toward the end of August ahead of the planned launch of its software wallet along with Android and iOS apps. However, the wallet launch was delayed on 28 August because of technical issues, sending the price down from $0.00000354 to $0.00000281. The price continued to fall in September, reaching $0.00000119 on 10 September.
The Android version of the SafeMoon Wallet launched on 13 September, supporting an uptick in the price to $0.000001853 by 15 September. The developers opened up the beta version of the iOS app on 30 September while waiting for App Store approval.
The price today (14 January) is $0.000002121.
On 3 October, the developers indicated an updated roadmap for the safemoon crypto. This includes Version 2 of the coin, which has a new total supply of one trillion, and a coin burn that will have 575 billion coins in circulation. According to the updated safemoon news posted on 13 October, the new version has a lower fee to enable the use of safemoon for commerce, but the 10% fee will still apply to day trades. The token consoidation is 1000:1.
#SAFEMOON V2 update:— SafeMoon (@safemoon) October 17, 2021
- One-click update to convert V1 tokens into V2 contract within the #SAFEMOONWALLET app
- Lower tax to enable SafeMoon use for commerce
- 10% tax still applies to day trades
- V2 is the evolution of SafeMoon #SAFEMOONSUNDAY
On 12 December CEO John Garony tweeted that V2 was live adding there were some "new features in the wallet".
The new version of the coin could provide an opportunity for the developers to address the 12 flaws that blockchain security firm Certik found in its security audit of safemoon in April. There was an additional critical risk surrounding the accumulation of liquidity tokens that Certik has since marked as resolved.
The updated safemoon roadmap also includes card, exchange and blockchain launches scheduled for this year, while the launch of a hard wallet has been delayed to 2022 “to focus on wallet development”.
On 6 November the company tweeted there have been 600,000 downloads of the SafeMoon Wallet apps for Android and iOS. It added there were 2.9 million safemoon holders. The apps will launch more swap pairs for ether and BSC coins. On 14 October, the SafeMoon Wallet added an option to buy BNB coin, the native cryptocurrency of Binance’s platform, which was banned in the UK earlier this year, and convert it to safemoon.
The safemoon price has been trending higher in response to the updates. The potential prospect of a reduction in circulating coin supply and expanded usage could provide support for the crypto’s adoption. Where do forecasts suggest the coin price could move next?
Safemoon price prediction: Does the coin have a future?
At the time of writing, 5 January, the safemoon crypto price prediction from DigitalCoin projected that the coin could trade at an average price of $0.00000356 in 2022, rising to an average of $0.00000414 in 2023 and $0.0000055 in 2025. By 2028, DigitalCoin suggested safemoon could average $0.00000892.
In contrast, Price Prediction estimated there was potential for the safemoon price to move up to its previous high later in the decade. It forecasted that the price could average $0.0000027 in 2022, and then rise to $0.0000085 in 2025, reaching $0.0000555 by 2030.
What is not clear from the safemoon website is what value the coin or the organisation offer apart from being a vehicle for speculative investment. There is talk about the social media channels of a project called Operation Phoenix supposedly an internet of things project conecting wind turbines in The Gambia to bring wider access to the internet. "It creates a functional way to burn Safemoon while providing a stable crypto currency for the county," says one commentator on Reddit.
The company's main commentary on Operation Phoenix is in a YouTube video. It seems unclear what part, if any, the cryptocurrency plays.
It’s important to keep in mind that cryptocurrency markets are extremely volatile, making it difficult to accurately predict what a coin’s price will be in a few hours, and even harder to give long-term estimates. As such, analysts can and do get their predictions wrong.
We recommend that you always do your own research, and consider the latest market trends, news, technical and fundamental analysis, and expert opinion before making any investment decision. And never invest more than you can afford to lose.
Follow Capital.com to stay on top of the market’s latest news, analysis and forecasts.
The total number of safemoon coins created is a massive one quadrillion – that’s one thousand trillion. Of those, 777 trillion coins were made available to the community at launch, while the remaining 223 trillion are held in the developer’s wallet. At the time of writing (5 January) there were 585.5 trillion coins in circulation, according to CoinMarketCap.
Cryptocurrencies are highly volatile assets, making them riskier than other forms of investment. Moreover, safemoon is a new token and relatively little is known about it and the development team behind it. You should do your own research to help you decide if the coin is a suitable fit for your investment portfolio. You should evaluate the level of risk you’re prepared to accept before investing and never invest money you cannot afford to lose.
If there is continued interest from cryptocurrency traders, the safemoon price could rise in the future. However, DeFi token prices are highly volatile and subject to large price swings. Some tokens see sharp price peaks and then fall back and the price does not recover as traders move on to other assets.
The price forecasts from cryptocurrency prediction sites indicate the safemoon price could remain at a fraction of a cent in the coming years. Some forecasting sites highlight safemoon’s high risk, predicting it could fall to zero.
Whether you believe those predictions is a decision only you can make. As always, you should be aware that the past price performance is no guarantee of future returns. And never invest more than you can afford to lose.
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.