- As a cult favorite among crypto traders, SafeMoon (SFM) entices with its charm.
- Though SafeMoon’s initiatives appear groundbreaking, they will require significant effort.
- It’s a gamble if you find some quarters under the sofa.
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With the major cryptocurrencies rising higher on positive developments — mainly the possibility of peace in eastern Europe following the incredibly disruptive Russian invasion of Ukraine — investors appear to suddenly have the appetite for risk-on endeavors. If so, some speculators may want to spare some loose change for daring blockchain initiatives like SafeMoon (SFM-USD).
A token tied to its namesake protocol, SafeMoon specializes in decentralized finance (DeFi), seeking to improve analog functionalities with distributed trustless mechanisms. While you can dive into the granularity at your leisure, SafeMoon’s overall concept is to expand blockchain integration by imparting both practicality and economic demand for decentralized solutions.
Called tokenomics, the basic principle here is to develop a decentralized architecture that commands utility and incentivization. Obviously, the blockchain organically lends itself to significant efficiencies so the utility component isn’t really an issue. But how do you get people motivated to buy, hold and grow a particular crypto so that the underlying project takes off without centralized oversight?
| SFM-USD | SafeMoon | $0.001200 |
That’s the question that SafeMoon seeks to answer, simultaneously representing both the opportunity and the pitfall of decentralized solutions to real problems.
SafeMoon and the Power of Tokenomics
A recent debutante in the crypto complex, SafeMoon made its debut in March of last year. Thanks to the paradigm-shattering bull run at the time, the token enjoyed a meteoric rise. Even though it’s come back down to Earth since those heady days, SafeMoon remains a cult favorite among crypto traders.
Undoubtedly, some of the enthusiasm toward the token stems from its ridiculously low per-unit price. Theoretically, under the law of small numbers, any bit of news — or perhaps no news at all — could drive SafeMoon into orbit. Of course, the opposite is true but the “diamond hands” cult members probably don’t think too much of such threats.
But beyond the meme-ish potential of SafeMoon, the token is tied to powerful initiatives. One of the ways that the SafeMoon project is enhancing its tokenomics — that is, providing real economic value and incentives for its tokens — is through improving energy efficiencies.
As the World Economic Forum pointed out a few years ago, blockchain innovations can potentially aid the renewable energy transition by mitigating pain points in energy distribution. More interestingly for investors, decentralized protocols can help create mini-economies through renewable energy-based grids.
For instance, a household which has excess energy storage can sell that to other households that may need such power solutions at that particular time. It’s a novel concept that may eventually reduce the onerous hegemony of big centralized utility firms.
It’s a Tough World Out There
Although the concept of tokenomics could be a gamechanger for SafeMoon and similar blockchain projects, executing the idea is another story altogether. Ultimately, ideas alone cannot run a business enterprise. As the World Economic Forum also mentioned:
“…the intangible and comparatively small nature of EE [energy efficiency] assets and projects discourages traditional bankers and investors from dipping a toe into this area. The elusiveness of EE benefits is a significant drawback to potential investors. Contrary to other investments, energy efficiency cannot be directly measured in terms of incremental physical production. Rather, it is measured as a saving or reduction against a baseline of consumption or expense.”
The last sentence is key. While the blockchain is an innovative product, it’s essentially a database. What gives blockchain its power is the ability to interact with the database via a trustless mechanism. The blockchain itself is not going to impart energy efficiencies or eliminate global hunger or cure cancer.
Thus, the challenge of any blockchain initiative, whether we’re talking SafeMoon or some other crypto project is where a specific decentralized protocol imparts enough savings or benefits such as carbon reduction against a non-blockchain-influenced baseline. Within this calculation, the cost of blockchain integration must also be factored in.
After all is said and done, is SafeMoon the answer to EE shortfalls? That’s where the debate lies.
Might be Worth a Gamble
Although, I understand the directive and potential behind SafeMoon, actually facilitating innovations toward analog infrastructures — whether that be energy, education or some other economic/societal category — has always been the event horizon for cryptos. Many times, projects have the right idea but can’t quite get over finish line; that is, execute their vision.
Genuinely, I think it’s a fool’s errand to pinpoint with strong conviction any crypto project as being the ultimate answer to a vexing problem in the real world. Let’s face it — with over 18,500 cryptos available, it’s incredibly difficult to say that SafeMoon is the one.
Still, the idea of implementing energy efficiencies through blockchain technology is quite intriguing. Combined with the token’s cult following, SafeMoon might be worth throwing a few cents in.
On the date of publication, Josh Enomoto 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.