Safemoon (SAFEMOON-USD) was one of the most popular meme coins in early 2021. The company reached an all-time high market capitalization of $5.75 billion on in May 2021. However, the cryptocurrency has since declined and there does not seem to be a revival in the immediate future. Since the start of this year, Safemoon has declined to its current market cap of $314 million. According to Google’s (NASDAQ:GOOG) Google Trends, Safemoon’s popularity has dropped by 99% since April 2021. The trend is likely to continue since Safemoon does not have adequate plans to increase its utility.
Safemoon does not have solid use cases. For example, currencies such as Ethereum (ETH-USD), Algorand (ALGO-USD), and Polygon (MATIC-USD) focus their efforts on utility and scalability. Take Ethereum, for example. There are more than 515,000 ERC-20 tokens on the Ethereum blockchain, which pay fees to the Ethereum blockchain using ETH. Moreover, Ethereum has been innovating with significant plans for the future, such as switching to a proof-of-stake (PoS) network.
In addition, currencies such as Ethereum, Solana (SOL-USD), and Cardano (ADA-USD) are the most commonly used for non fungible tokens (NFTs). They also have decentralized apps (DApps), smart contracts, staking, and even more use cases when you consider that many of their tokens, such as ERC-20, also have some form of use in their niche. For Safemoon, the project itself is a BEP-20 Binance (BNB-USD) Smart Chain (BSC) Token. Thus, Safemoon does not even have its own blockchain. This makes it difficult for long-term innovation as the project has little independence. Moreover, one of the most significant drawbacks of Safemoon is that investors have to pay a flat 10% fee upon selling. For an asset that is in decline, it is not a wise move to lose 10% of your funds upfront.
In December 2021, the Safemoon developers abandoned the original project. They moved to Safemoon V2 (SFM-USD), which has failed to deliver a significant reversal for Safemoon due to its declining popularity. It is important to note that if anyone unaware of the V2 migration process makes a transaction in the old project, they will be taxed at 100% and lose the entirety of their funds. That 100% tax goes directly to the V1 contract owner, where they have been withdrawn several times. If they wish to migrate, they will also have to pay a few dollars in BNB.
I believe that Safemoon is undoubtedly not a buy. It is highly dubious and volatile. The project has been in decline for almost a year. It is simply not worth the risk. It is improbable for the business to succeed in the long-term with all the confusion and the criticism surrounding the token.
Disclosure: On the date of publication, Omor Ibne Ehsan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.