After seeing the rise, and subsequent fall of sh*tcoins every day for what feels like an eternity, I can confidently say that I can usually recognize a scam when I see one. Safuu is one of those scams.
Sidenote: Coffeezilla made a great video talking about Safuu, mostly in the context of the founder, and some sketchy dealings going on with the burn wallet. Check it out below!
First, let's start with the most prominent sign this is a scam: The APY. Now, high APYs aren’t unheard of in DeFi, for instance, OlympusDAO had a high APY for quite a long time, which will be relevant here, as Safuu uses similar mechanics to Olympus.
Safuu promises a 383,025.8% APY. As previously mentioned, OlympusDAO had an APY similar to this for a while. Still, it quickly fell, and the APY now sits at around 898%, with a framework that will continuously reduce it over time.
Safuu also states that it’s fixed. This is total lunacy. You can have a high APY, but it must go down. This is a matter of the project’s survival. If your project has a fixed APY that is this high, the token will fall to such a low price, that it will be practically worthless. But let’s say that doesn’t convince you. Let’s use Safuu’s math to show you.
Above is a chart from the Safuu docs, which shows the number of Epochs (Epoch = +1 Rebase) As we can see here, the graph shows that their estimated market cap of $3,000,000, which is currently at $55 Million, would lead to a market cap of $18 Billion after one year. A 6000X Increase. It doesn’t take a genius to figure out that with a market cap of $55 Million, after one year, the market cap of the project would have to exceed $330 Billion. For context, that’s nearly half the market cap of Bitcoin. They also have a “Longterm Interest Cycle” which is just scheduled APY decreases after the first year. Even then, the decreases would be after the project already hit a market cap of over $330 Billion, and would still increase it past the market cap of Bitcoin by over 15 times.
Now, it’s pretty easy to see how this is unsustainable, but we’re not done yet. Safuu doesn’t just promise impossible gains, but it steals from investors too.
Anyone who’s read my DRIP article knows what I’m talking about. Safuu uses a similar model to the classic Safemoon Ponzi scheme. Safuu doesn’t like to loudly advertise the full extent of their tax system, so let’s take another look at their docs.
Here we can see the fees the protocol takes when you buy, and when you sell. When you buy, you have a 14% loss on your investment immediately. If you want to sell, be prepared to lose another 16%. Where do these taxes go? They go to 4 areas:
The Liquidity Pools, so people can trade.
The “Safuu Insurance Fund” (SIF) Which is how the protocol pays yield. It’s not clear in their docs whether they mint new tokens to pay the interest, and cover the rest through SIF, or if they only use SIF when they’ve hit the token cap.
The Treasury, which just adds more money to the SIF, and can be used for basically anything the devs want. Ex: New protocols, marketing, etc.
The Fire Pit, which just holds Safuu tokens to “burn” them. It’s important to note that these tokens also rebase like all other tokens, which means they grow with the circulating supply, but also require funds from the SIF that are meant to back tokens other users hold.
Now, why do I call the taxes a Ponzi? Because that’s exactly what they are. When you buy Bitcoin, for example, you can sell immediately after you buy, and end up with the same amount. With Safuu, you instantly lose 14% when you buy, and another 16% when you sell. This money goes back to all the other holders indirectly, through decreasing supply, funding rebases, etc. The taxes are for “stability” but stability is just another word for propping up the price, and encouraging others not to sell their tokens.
Many people will argue that economics as a whole is technically one giant Ponzi, but even with that argument, Safuu is still a Ponzi on top of a Ponzi, which loses you more money than a traditional investment if you buy and sell it.
Economics is a cycle of money, but it does not have the same inherent risks as a Ponzi scheme, such as being much more short-lived, offering unsustainable APYs, and not having as much capital that people are willing to invest over time.
And even with all of this, with their wild claims of $1000 turning into over $3,00,000 and their false claims of sustainability, there’s something that is one of the largest pain points for any project that is operating as a scam:
Utility.
See, SAFUU has zero reasons to exist. It only exists to get people to buy it and to pump the developer's bags. It isn’t a yield optimizer, lending market, DEX, stable currency, hedge fund, or marketplace. It’s just a protocol with a worthless token, that has only been assigned value because of its insanely high APY. Tell me, would you buy SAFUU if the APY was a reasonable 5–20%?
Thanks for reading! If you have any other questions or suggestions, feel free to leave them in the comments. If you’re feeling salty about me insulting your investment, take a deep breath, and then put your opinion in the comments :)
Not financial advice. Consult with a licensed financial expert if you want financial advice. I try to expose scams, but I am not giving advice on what you should buy, sell, etc.
