Throughout history, humans have built different types of systems to help their civilization thrive. For a system to work properly, rules should be implemented. That being said, each system had a set of rules to function as it was supposed to. Even today, systems are built upon a set of rules that must be followed, manually or automatically.
When it comes to cryptocurrencies, this set of rules is called tokenomics. The tokenomics of a particular cryptocurrency involve its supply, its network fees, its token distribution, governance, and many more factors that play a role in the performance of that cryptocurrency. If we compare cryptocurrencies to fiat currencies, we understand that what Monetary Policy is to fiat currencies, tokenomics is to cryptocurrencies.
SafeMoon was known for its tokenomics, which are, well… interesting to say the least. Many people called this token a scam just because of its tokenomics, which are not as bad as some portray them to be.
Tokenomics of SafeMoon
Supply
To begin with, let us focus on the supply of SafeMoon. This token has an enormous total supply of 1 Quadrillion, a number with 15 zeros behind it. To put this into perspective, let us compare it to Bitcoin. Bitcoin has a maximum supply of 21.000.000 while SafeMoon has a total supply of 1.000.000.000.000.000. The team behind SafeMoon justifies this by claiming that they want everyone to be able to buy SafeMoon, not just the rich people.
Yet, only 585,536,366,402,812 SafeMoon tokens are in circulation. This comes as a consequence of the burn that constantly happens to SafeMoon tokens.
Reflections
You may have heard of SafeMoon Reflections when reading SafeMoon-related tweets or articles. SafeMoon was the first token to introduce this concept, making it the first reflection token. So what are Reflections? Simply put, through reflections, SafeMoon can acknowledge SafeMoon’s long-term holders and reward them with tokens. This makes reflections similar to Proof-of-Stake (PoS) networks, but with some tweaks.
But where do these SafeMoon tokens come from? For each transaction, a 10% penalty tax is charged to the one who is executing the transaction. The first 5% is allocated to the decentralized crypto exchanges (DEXs) to provide liquidity, 2.05% is burned, and the remaining 2.95% is distributed to SafeMoon holders proportionally. The more SafeMoon you are holding onto, the more you will get rewarded. Through Automatic LP (the 5%), RFI Static Rewards (the 2.95%), and the constant burn (the 2.05%), SafeMoon aims to improve its market performance.
At the time of writing, there are more than 2.5 million SafeMoon holders. Furthermore, around 400 trillion tokens have been burned. When it comes to liquidity, more than $56 million worth of SafeMoon is locked in to provide liquidity.
Also Read: SafeMoon Price Prediction 2021 and Beyond – Is SAFEMOON a Good Investment?
Takeaways
- Tokenomics are the set of rules for a certain cryptocurrency or token.
- SafeMoon has a total supply of 1.000.000.000.000.000 (Quadrillion) tokens, while only about 585 trillion are in circulation because of the burns.
- SafeMoon is a reflection token, making it the first of its kind.
- Reflections are the rewards that are distributed to SafeMoon holders, similar to staking.
- To make people hold their tokens, SafeMoon charges a 10% penalty tax to everyone who is trying to move their SafeMoon holdings.