While the crypto sector has found itself mostly on the back foot in recent days, one bright spot at the smaller end of the market is Safemoon, a new crypto launched in the first quarter of 2021 that has been gaining traction.
While still a minnow by crypto standards, with each token valued at around US$0.0000079 at time of writing, the value of Safemoon has risen steeply by over 1,000% since last Friday, giving it a market cap of around US$4.6bn and drawing fresh interest from investors.
What is Safemoon?
Technically, Safemoon is not a cryptocurrency in the same way that Bitcoin is, rather it serves as a decentralised finance (DeFi) token.
DeFi tokens aim to replicate financial processes without the need of a third-party intermediary such as a bank, instead choosing to rely on computer processes such as smart contracts.
Safemoon specifically says it is aiming to resolve issues that afflict other cryptos on the market, namely token price volatility and a tendency of traders to sell assets quickly and not hold onto them for the long term.
To address this, Safemoon penalises any sellers of its tokens with a 10% transaction fee, half of which is then redistributed to other token holders.
Is it the new Dogecoin?
With its recent surge in value and microscopically low entry price, Safemoon is being compared by some to fellow crypto minnow Dogecoin, which despite being set up as something of a joke in 2013 has seen its value rocket in 2021, thanks in part to the back of high profile individuals such as Tesla Inc‘s (NASDAQ:TSLA) boss Elon Musk.
From its relatively obscure origins, Dogecoin now has a market cap of around US$51.4bn, making it the fifth most valuable crypto on the market.
With this in mind, it could be argued that Safemoon has more going for it than Dogecoin has, with the company behind the token planning to launch its own exchange through a US$1mln fundraising, of which it says it has currently amassed just over US$770,000
While the token is still relatively unknown across the wider crypto investment sector, the company is aiming to live up to its name and send its value “safely to the moon” by the end of the year, mainly through the development of several projects including functionality for non-fungible tokens (NFTs).
Safemoon is also aiming to list on more crypto exchanges such as Coinbase Global Inc (NASDAQ:COIN) to increase its accessibility to investors.
However, given its current lack of access to the mainstream market (buying Safemoon currently involves a somewhat complex series of transactions across multiple cryptos and platforms) and status as an unknown entity, many are treading cautiously.
However, if Safemoon can prove its legitimacy, and if its social media-focused promotion strategy pays off, it could find itself enjoying a trajectory similar to Dogecoin.