By now you've probably all heard of Safemoon, the DeFi token blowing up on social media... and you're wondering (first of all), "What the f*** is it?" You've likely heard of the stories of people making a ton of money, and it's giving you the infamous fear of missing out (FOMO).
Cryptocurrency is currently in the late stages of a bull market. This is evident by the drop in Bitcoin dominance, combined with what crypto enthusiasts call the "alt season". This is a pretty good indication that the end is near. But, there is a LOT of money that will be made in the alt coin market. There will also be a LOT of money lost. Unfortunately, this whole thing becomes an open scamming ground and casino.
So, where does Safemoon fit into all of this?
Without getting into the technicals, SafeMoon is built on the premise of rewarding long-term "hodlers" and penalizing short-term (YOLO) traders. It does this by charging sellers a 10% fee for selling and gives half (or 5%) of it to existing holders of the token, where the other half (5%) gets "burned".
Based on my understanding, the only use case here (arguably) is an inflation hedge. One can (arguably) compare Safemoon to Bitcoin. Bitcoin's technology is too slow and too expensive to transact with at scale – which is why, it is now considered (by most) as a "store of value" rather than currency. So, how is Safemoon any different? Well, Bitcoin does have the inherent computing power behind it that secures it's blockchain – which gives investors a lot more faith than a "scam token".
Why is it being a called a "scam"?
The reason why a lot of people are calling this a scam is because, like I said, there is literally no use case for it. It isn't solving a problem. It's a providing a unique twist to a conventional MLM or pyramid-scheme.
The concept of the entire coin is to make money by holding it, while new gullible "investors" jump in to provide liquidity to the previous set to get out in a profit. It's just a game of passing around the hot potato, until someone gets left holding the bag. This model like this, or any pyramid scheme, isn't sustainable in the long-run because it eventually runs out of people willing to "invest". When this happens, everyone will look to take their profits because there was no reason to buy into it in the first place.
There is clearly a lot of money being made, and if you've had success then great! But, just remember, at some point, someone will get burned and you'd be making money at their expense. It will end badly with a 99.9% likelihood. But, if you're in it for the gambling, then go for it. Only play with what you can afford to lose and you'll be fine either way 😊