Moon this, moon that... but how? How does this happen? We've seen a lot of these tokens pop up around social media platforms recently. Some people hate them, some people love them, and most of everyone else is somewhere in the middle struck with curiosity. These brand new DeFi, deflationary, frictionless yield, liquidity generating, static reward tokens are catching everyone's attention. They appear stagnant for quite some time and then drastically jump in value or, take a trip to the moon.
In this article, I will be going over the definition of those bolded terms above and why these tokens are taking social media platforms by storm.
I am not sponsored by anyone or anything mentioned in this article.
This is not financial advice. I am not a financial advisor.
Please do your own research before making any decisions before investing.
This article is meant for educational purposes only.
Whether it's your favorite influencer, social media platform, or your favorite subreddit, I know you've heard about these new tokens that have popped up. A few that immediately come to mind are MoonShot and SafeMoon. They promise deflationary, frictionless yield with static farming rewarded to holders, alongside liquidity generation.
With these tokens, liquidity is generated with each transaction of the token either buying or selling. Requiring users to set slippage to <11% when swapping on PancakeSwap, this is how the liquidity is obtained. A percentage of that fee goes into a liquidity pool that is auto-locked via a contract for years into the future. The other remaining portion of that percentage is distributed to stakeholders of the token as frictionless static farming (or yield farming). This means that if you own tokens, you will continue to generate tokens in your wallet from just holding on to them.
These tokens also promise to be deflationary. Deflationary tokens are tokens that have a continuously depreciation of supply on the blockchain. This tactic is aimed to increase the value of the token over time with the decrease in supply, as more people buy and hold it. This causes the coin to shoot up in price rapidly, giving that "moon" effect.
So what's all the hype about?
Individuals see this token as their first class ticket to the Lamborghini dealership or their attempt to be the next Elon Musk. They are being blasted all over Twitter, Reddit, Instagram, Facebook... literally everywhere. At a fraction of a fraction of $0.01, people can buy millions, billions, even trillions of these coins without breaking a sweat. Then they can watch their overall token amount increase overtime with each purchase or selling off of the token. This peaks peoples' interest because "if you are constantly gaining, you'll never lose". This isn't always the case, however, and people have lost great amounts of money already. Whether it's the swapping and exchange fees people are losing or just not getting in at the right time, these tokens pose a risk similar to every other crypto - high volatility. These tokens rise and fall swiftly, as some massive stakeholders (whales) buy and sell off their stash. The high volatility of these tokens steer most people away, but could be beneficial to those who get in at the right time and sell off at the right time. At the end of the day with trading, timing is always everything, right?
Just because your favorite influencer tweets about it or all your friends are jumping on board with these, it's always in your best interest to do your own extensive research before committing to a purchase. Check out the tokenomics behind the project, check out their website, check the blockchain addresses, check the developer transparency. Check everything - even the source code on the main website. Make sure you are making the right decision and never risk more than you are willing to lose at any given time. You could wake up tomorrow with thousands more than you had... or you could have absolutely nothing.
The choice is up to you!
What do you think about these tokens?
Have you had your run with them yet?
Let me know in the comments down below!
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