SafeMoon is a DeFi protocol that eliminates the shortcomings in yield farming.
In the decentralized finance (DeFi) world, the annual percentage yield (APY) expected on deposited funds mostly determines whether or not liquidity providers (LPs) render their service to a given platform. Consequently, DeFi protocols lure LPs by flashing hard-to-resist APY values.
Unfortunately, the scheme benefits early entrants since the incentives decrease as liquidity increases. Apart from LPs, a platform’s base asset is highly valued, but only temporarily. When the hype is out, the token’s price tumbles, spelling doom for everyone involved, except those that alighted the train early enough.
The SafeMoon protocol approaches the equation from a different angle to ensure equitable sharing of trading rewards. As such, it eliminates the line between new and old LPs on the network. Below we take a closer look at the platform and how it achieves the effect.
Who is behind SafeMoon Protocol?
The SafeMoon core team comprises respected individuals led by John Karony, Thomas Smith, Henry Wyatt, and Trevor Church. Karony takes the wheel as the CEO while Smith is the network’s chief technology officer (CTO). On the other hand, Wyatt is the vice president of research and development.
Notably, the core team has extensive experience in different fields and worked for leading firms prior to joining SafeMoon. For example, before joining the platform, the CEO founded TANO and was an all-source analyst with the United States Department of Defense.
On the other hand, Smith worked for Goldsmith Blockchain consulting, was the CTO at Geometric Gaming Corporation, and director of software engineering at Geometric Medical Corporation.
Wyatt has a Bachelor’s degree in computer software engineering from the Shippensburg University of Pennsylvania. His work experience includes working in the software engineering department at TEOCO. Also, he founded HLWGroup, a video game entertainment firm.
What is SafeMoon protocol?
SafeMoon is a DeFi protocol that eliminates the shortcomings in yield farming. Its white paper defines it as “a community-driven, fairly launched DeFi Token.” While the definition looks somewhat confusing, it implies that the protocol doesn’t lure users by swinging temporally-flavored APYs close to their noses. Instead, it provides a safe landing on the moon during the reward farming process.
The protocol achieves its vision through three core principles:
SafeMoon also calls this reflection, which solves yield hunting problems. Static rewards achieve this by first enacting conditional rewards guided by the token trading volume. By connecting rewards to the volume, SafeMoon drives down the token liquidation pressure. Mostly, early investors ignite the selling pressure and leave the project after the initial high APY rates are diluted by more participation from new users.
Secondly, the static rewards encourage holders of the base asset to keep their faith in the protocol in anticipation of earning higher rewards tied to the token balance.
Token burns have been employed in the cryptocurrency sector to reduce supply and prop up value. However, they aren’t 100% effective. For instance, during a project’s early days, token burns can bring the desired effect. Unfortunately, the process removes control from the project’s team.
Team-controlled burns are advantageous since they keep a project’s community informed and rewarded. For example, the rules to be followed during a manual burn can be advertised.
SafeMoon follows this approach to provide benefits and incentives to community members in the project for the long haul. Additionally, the project’s team members increase the transparency of the process by publishing the number of tokens burnt on the project’s webpage. Consequently, it helps show the actual amount of circulating SAFEMOON tokens.
Automatic Liquidity Pool
This is the third ingredient in SafeMoon’s formula to bring sanity to the yield farming scene. Note that the liquidity provision engine is driven by a smart contract. The contract performs different functions to provide a smooth and streamlined outcome.
For instance, it first accepts coins from traders (buyers and traders) and directs them into a liquidity pool. Notably, this function provides a reference point for token prices.
The second function of the contract is to maintain the base asset’s volume in the pool by introducing a penalty for those looking to withdraw their assets. The protocol considers this to be an “arbitrage-resistant mechanism.”
The network’s white paper clarifies this point by noting that the penalty comes in the form of tax added to the total liquidity. In doing so, it galvanizes the token’s price floor. Notably, the practice hinges away from the token burn function used by other tokens in the DeFi world that have proven to target short term viability.
For SafeMoon, an increase in liquidity providers using the platform’s native token doesn’t affect holders due to a concrete price floor.
Additionally, an automatic liquidity pool cushions token holders from suffering huge losses emanating from price dips caused by whales who decide to liquidate their token holdings. In the cryptocurrency space, huge price fluctuations are mostly tied to whales buying or selling a notable amount of crypto in the open market.
SafeMoon has a base asset known as SAFEMOON. The project launched with a total supply of 1,000,000,000,000,000 tokens.
However, prior to activation, the dev team burnt their share, 223,000,000,000,000, leaving a fair community supply of 777,000,000,000,000 tokens.
Trading the tokens takes into account three features; static rewards, liquidity pool acquisition, and burn functionalities. The platform introduces a 10% charge on every trade.
Half of the fees find its way into the wallets of active SAFEMOON holders. The other half is further subdivided into two. One half goes into purchasing Binance Coin (BNB). The other 50% combines with the purchased BNB to form a SAFEMOON/BNB trading pair on Pancake Swap, a decentralized exchange on Binance Smart Chain (BSC).
What’s in Store for the SafeMoon Community in The Future?
The dev team has a lot in store for the platform’s community. From the look of it, they’re just getting started. For instance, it’s working to integrate Whitebit tokens and putting the final touches on an app, wallet, and game.
Interestingly, SafeMoon has its eyes fixed on the non-fungible tokens (NFTs) world. As such, the team is designing an exchange specifically for NFTs. Other notable products in the production line include a standard exchange for crypto trading targeting the African market, a charity drive, an app holding crypto and blockchain educational content.
In its expansion plan, the protocol targets to increase its core team by over 40%. Also, it aims at establishing offices in strategic places such as Africa, Ireland, and the United Kingdom. SafeMoon scholarships are next in the line. Notably, for easier community engagement, the platform engages with its community through conventional social apps such as Facebook, Twitter, Instagram, Reddit, Telegram, and Discord.
With such notable features, SafeMoon targets one of the most significant pain points in a yield farmer’s journey to financial freedom. For the longest time, whales have been taking advantage of their deep pockets to bend the market in their favor. Once they exit, newcomers and shallow-pocketed investors are left counting losses when the price dips.
Further, SafeMoon addresses other critical areas such as cryptocurrency and blockchain education. Its impact pierces through the entire virtual currency industry than just the SafeMoon ecosystem. Setting offices in strategic countries across the globe brings the project closer to its community. On the other hand, its token distribution model enhances fairness among participants.