Safemoon, a Binance Smart Chain token, soared by 16 times in the past week driven by TikTok videos, only to immediately whiplash holders as it went on a dizzying ride that has halved its value.
The token, whose platform’s only use case is to provide mechanisms to manipulate its price, is 54% below its high of $0.0000093 at the time of writing.
The all-time high was fueled by Zoomers shilling the token on Tik Tok. The posters claimed to be millionaires and billionaires thanks to their Safemoon holdings. Owning 10M of the token at its peak meant owning $93 of SAFEMOON.
The Safemoon website’s whitepaper section lists three main features of the protocol. The first is “static rewards,” which “aim to alleviate some of the downward sell pressure” and “encourages holders to hang onto their tokens to garner higher kick-backs.” The mechanism’s specifications aren’t addressed, though the project says they are dependent on the token’s trading volume.
Safemoon’s second feature, “manual burns,” will be “controlled by the team and promoted based on achievements helps to keep the community rewarded and informed.” Details on the conditions for the token burns aren’t outlined in the whitepaper section.
The Safemoon team calls the last feature, the “Automatic Liquidity Pool,” its “secret sauce” which “sucks up tokens from sellers and buyers alike, and adds them to the LP (liquidity provider) creating a solid price floor.” Again, details of the functionality are omitted.
Safemoon’s Reddit has over 113K members despite being started little over a month ago. For context, MakerDAO, which was founded in 2015 and is arguably the first DeFi protocol, , has a Reddit community of 24.4K members.
“Rome wasn’t built in a day, #SAFEMOON was,” read an Apr. 20 tweet from the company, alluding to the speed at which the protocol has entered the crypto scene.
The speed at which the protocol’s token has gained value has traders like Cantering Clark saying the project is “the epitome of unsophisticated, new market participant, herd behavior in chart form.”
If nothing else, Safemoon has certainly succeeded in drawing attention to itself. As the SAFEMOON token peaked, its search queries on Google trumped “DeFi” searches by 100 to 1.
Whether the project can sustain its momentum is another story.