What is the Safemoon model of the public chain of exchanges that spreads like a virus?

Wu Shuo Author | Tan Shu

Editor of this issue | Colin Wu

1 Safemoon's amazing rise

Safemoon was launched on BSC on March 8. In just one month, the price increased 200 times, which means that if you invested 10,000 yuan in Safemoon at any time in March, it would become 2 million yuan by mid-April. So on April 20, Safemoon replaced Dogecoin and became the most searched cryptocurrency name on search engines. Coingecko data on May 18 showed that Safemoon ranked 42nd, second only to Cake, which was created by Binance. Contiune Capital said that this model has accounted for more than 60% of new projects on the Binance and Huobi ecosystems.

However, on April 21, its price reached $0.000013 and then collapsed. Although it rebounded later, the price never returned to that height. Today, its price is $0.00009, which still brings rich returns to early investors. What is the role of Safemoon? The team makes no secret of the fact that it is useless. If it must be said, it uses a unique mechanism to encourage people to hoard coins.

2 Safemoon's unique mechanism

According to Safemoon's white paper, when a user sells Safemoon, a 10% "exit tax" will be levied, and half of this 10%, that is, 5%, will be equally distributed to all holders, and the other 5% will be divided into two equal parts, one will be sent to the owner of the contract to increase liquidity, and the other half will be destroyed.

This mechanism of Safemoon is largely in line with the concept of "HODL" in cryptocurrency, which encourages users to get rich by holding coins. However, this also means that if Safemoon investors want to make a profit, they must wait for the price of the coin to rise by at least 10% before selling it. The transaction cost is extremely high, and there must be a continuous flow of new entrants to maintain this model. After the price drops, it may be more difficult for new entrants to enter the market because of the mechanism of difficulty in selling.

It is precisely because of this that @TheCryptoLark, a cryptocurrency celebrity with 270,000 followers on Twitter, directly called it a Ponzi scheme and said that the bigger the scam, the more likely it is to pull the market back.

3 Safemoon Controversy

1. Theoretically, there is no upper limit on the total amount. Although the current issuance of Safemoon is 1000000000000000 (i.e. one quadrillion), according to its contract, its upper limit is 100000000000000000000000000, which is equivalent to the number of all atoms in one million galaxies.

2. The founding team holds the majority

@waronrugs, a Twitter influencer with nearly 100,000 followers, pointed out that more than 50% of Safemoon is held by its founding team, who may dump the stock and run away at any time.

3. Insufficient technical capabilities

Safemoon's contract is directly copied from the smart contract RFILIQ on Ethereum. Safemoon not only retains the spelling errors of the original contract, but also retains some questionable issues of the original contract. This also raises questions about the security of Safemoon.

Safemoon's model originated from PIG and SAFEMARS on the Ethereum chain. The popularity was so high that the Matcha Exchange was continuously down; HTMOON on HECO also exploded quickly, but it fell immediately after reaching a high point, once again triggering a large number of Chinese retail investors to defend their rights. Continue Capital's article stated that at present, almost all BSC and HECO use this model. There are even a large number of projects with the same name and similarity in the market, making it difficult to distinguish between the real and the fake.