In this article we will learn about the newest inovation called Safemoon, learn how it works here!
Understanding Safemoon (SAFEMOON)
Cryptocurrency Safemoon (SAFEMOON) is one of the newest projects launched in 2021, entering the realm of DeFi (Decentralized Finance). Safemoon is built on the Binance blockchain, BNB Chain, and is a cryptocurrency that is attracting investors' attention with its innovative concept.
Function of Safemoon (SAFEMOON)
Safemoon (SAFEMOON) has several functions that make it unique among other cryptocurrencies. One of its main features is a reflection protocol that imposes a tax of around 10% on each transaction. The tax is divided, some of it is given to Safemoon holders as a reward, while the other part is used to strengthen market liquidity.
History of Safemoon (SAFEMOON)
Launched in March 2021, Safemoon was founded by a team led by John Karony and Thomas Smith. They have a vision to create an ecosystem that supports community participation and encourages long-term token custody.
Although the project gained rapid popularity, Safemoon (SAFEMOON)also received criticism for its ultra-incentivizing economic model which was thought to hide a pump-and-dump strategy.
Reasons why Safemoon (SAFEMOON) was created
Safemoon was created to address some specific problems in the crypto market. The creators want to reduce market volatility and encourage token holders to hold their assets for the long term.
By implementing mechanisms such as reflection protocols and liquidity locking, Safemoon (SAFEMOON) seeks to create a stable and sustainable ecosystem.
How Safemoon (SAFEMOON) Works
Safemoon works through several key mechanisms, including reflection protocols, liquidity locking, and token burning. The reflection protocol shares transaction taxes to reward Safemoon (SAFEMOON) holders and strengthen market liquidity.
Liquidity locking aims to protect investor funds, while token burning aims to reduce the supply of circulating tokens, creating scarcity and a potential increase in value.
Reflection Protocol
The first mechanism is the reflection protocol. This is the main function of the SFM ecosystem which applies a tax of around 10% on every transaction involving SAFEMOON tokens. This 10% tax aims for two things: 5% of tokens are given to all Safemoon holders, and 5% of tokens (some LP tokens or liquidity tokens) are used to strengthen market liquidity.
LP Generation and Liquidity Lock
The second key mechanism that determines how SAFEMOON functions is liquidity locking. The Safemoon system locks a portion of liquidity to protect investor funds. This aims to gain the trust of crypto investors who have purchased SAFEMOON.
Combustion
Lastly, like many other cryptocurrencies, Safemoon adopts a token burning mechanism. Token burning is an operation to gradually reduce the supply of circulating tokens. As time goes by, a certain volume of Safemoon tokens has been burned. This process creates token scarcity, which can increase the value of the token.
Since migrating to V2, Safemoon is now compatible with the Ethereum and Polygon blockchains. By switching to V2, four functions are executed on each transaction:
- 4% for reflection protocol
- 3% to earn LP tokens
- 2% tokens burned
- 1% added to the Safemoon ecosystem expansion fund
With this mechanism, Safemoon (SAFEMOON) works to achieve its goal of creating a stable and sustainable ecosystem, motivating long-term token holding, and addressing volatility in the crypto market.
Safemoon Conclusion (SAFEMOON)
With its innovative concept, Safemoon creates an ecosystem that combines incentives for token holders, through rewards from reflection protocols, with liquidity protection and the potential for value appreciation through token burning. Despite the spotlight and criticism, Safemoon remains a subject of interest among crypto investors.
With its definition, function, history, reason for creation, and details of how it works, Safemoon offers a complete picture of how this cryptocurrency operates in the blockchain ecosystem. For investors and crypto enthusiasts, Safemoon (SAFEMOON)continues to be an interesting and promising subject of discussion.
How to Buy Crypto from Bittime
You can buy and sell crypto assets in an easy and safe way via Bittime. Bittime is one of the best crypto applications in Indonesia which is officially registered with Bappbeti.
To be able to buy crypto assets at Bittime, make sure you have registered and completed identity verification. Apart from that, also make sure that you have sufficient balance by depositing some funds intowallet. For your information, the minimum purchase of assets on Bittime is IDR 10,000. After that, you can purchase crypto assets in the application.
Monitor graphic movement Bitcoin (BTC) price, Ethereum (ETH), Solana (SUN) and other cryptos to find out today's crypto market trends in real-time on Bittime.
Read More
Staking vs Lending, Which is the Most Profitable?
DISCLAIMER: This article is informational in nature and is not an offer or solicitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for changes in fluctuations in crypto asset exchange rates.
Comments
0 comments
Please sign in to leave a comment.