Explain Stakemoon To Me

Since its inception, the crypto industry has accumulated over $169 billion and several thousands of transactions daily. The entrant of blockchains, cryptocurrencies, NFTs, and stablecoins into the gameplay has provided more possibilities for individuals to leverage the various projects and profit massively.

Stakemoon is one of the recent and highly-profitable crypto projects to provide various financial solutions to billions of traders and investors. This guide explains all you need to know about the Stakemoon (SMOON) cryptocurrency, its history, tokenomics, and how you can buy the Stakemoon coin. Before that, we’d touchdown the topic of the PoS consensus mechanism and what it means. That said, let’s proceed.

What is PoS Consensus Mechanism?

The Proof of Stake consensus mechanism is a category of blockchain consensus mechanisms for executing transactions and creating new blockchain blocks. A consensus mechanism is a means of validating blockchains and securing the database from intrusive access. The mechanism validates transactions in a decentralized ledger by selecting a validator based on the number of tokens the validator owns.

Before its creation, the only available consensus mechanism was the Proof of Work (PoW), which required additional computational power to solve abstract mathematical puzzles and provide security for the blockchain. The PoW algorithm rewards users some tokens based on the number of puzzles solved, otherwise known as “mining.” However, the Proof of Work consensus algorithm consumes enormous electrical power and isn’t energy-efficient. So, a more effective, affordable method arose—the Proof of Stake consensus algorithm.

In PoS, validators lock a number of their tokens into a liquidity pool and get rewarded with some additional tokens for providing liquidity to that protocol. Proof of stake requires lesser processing effort, cost, and energy. Also, it facilitates faster and more transactions than the Proof of Work algorithm.

Participants in a PoS network, also called “stakers,” pledge (or stake) their coins to create their nodes as validators. We mean locking your crypto tokens in a blockchain to validate transactions by staking. When you stake your tokens, they are locked up in the pool, whereas you can un-stake your tokens when you want to trade them. Also, we need to highlight that when a person stakes their coin, they become a validator.

Some famous crypto projects that use the Proof of Stake algorithm include Solana, Tron, Cardano, Cosmos, and the innovative Stakemoon coins. While we’re not considering others in the article, we will discuss the Stakemoon cryptocurrency and how it can profit you. On we go.

What is Stakemoon?

Stakemoon (SMOON) is a decentralized crypto asset developed and hosted on the Binance Smart Chain and provides autonomous staking. Also, the Stakemoon protocol facilitates a liquidity-providing technology. Notably, it implements rare taxation to scare away short-term traders from destabilizing the pools.

The protocol focuses on an all-embracing purpose of incentivizing long-term investors and token holders. While other cryptocurrencies offer 2-20+% in annual returns for staking, Stakemoon provides users up to 50% on their returns. Stakemoon’s development team proposes that the protocol will incentivize its users in two significant ways.

The first means of rewarding users is through the coin’s taxation policy. This policy comprises a 15% tax charge to short-term / day-traders. This high tax rate discourages day traders from investing in Stakemoon for short-span investment benefits. This is because one very significant problem most new altcoins face is liquidity or unbalanced liquidity.

Severally, as new cryptocurrencies arise, traders see a potential of high profitability; they invest into the coin’s pool. However, as the coin’s price begins to appreciate, investors pull off their coins from the network by withdrawing their invested tokens. Consequently, the protocols start to lose value and encounter problems with scaling up. This limits and even destroys some cryptocurrencies while still establishing their foot in the ecosystem.

As a solution, Stakemoon introduces a 15% tax charge on transactions occurring in the network. This way, day traders will desist from capitalizing on the platform’s staking ability at the detriment of the entire network.

The second rewarding strategy Stakemoon utilizes is the long-term staking rewards. Thus, individuals who partake in staking in Stakemoon will get some token incentives. This is because, as we’ve earlier explained, Stakemoon and other blockchains that use the PoS algorithm uses tokens to validate transactions and create new blocks in the network. So, other traders’ transaction charges paid to the network are shared evenly among stakers in the blockchain’s staking activity.

Currently, Stakemoon is listed and live on several leading crypto exchanges and crypto platforms. These include PancakeSwap, CoinGecko, Coinbase, and CoinMarketCap. On CoinMarketCap, the SMOON token is trading at $0.001453, trading at a 24-hour Trading Volume of $623,82, as of writing. The token has experienced an upsurge of 6.23% in the last 24 hours, and it’s currently ranking #7248.

Presently, over 879,614,007 SMOON tokens are circulating.

Stakemoon Tokenomics: How it works

Stakemoon uses novel token economics to work reward participants in its staking program. Already we’ve discussed that the protocol implements a 15% taxation policy on short-term trades. So, users who choose to buy, sell, and trade as day traders will receive such taxation policies.

Day traders usually enter and terminate stable trades for hours, in contrast to weeks, months, and even years. However, these traders seek to earn legit but consistent profits from such trades. So said, the 15% tax policy is established to limit the financial possibility of day-trading when individuals are trading Stakemoon in an exchange.

Also, more importantly, this ensures that most users in the Stakemoon community are long-term traders and investors in the protocol rather than short-term traders. Thus, enforcing stability to the Stakemoon network.

10% Dividend Policy

Once the protocol collects the 15% tax from day traders, it distributes the funds in two methods. First, 10% is shared among token holders in a dividend reward. Here is a brief example of how the funds are distributed:

Supposing a day trader sells 30,000 SMOON tokens in a crypto exchange like PancakeSwap. The trader will be taxed with the 15% tax policy for that transaction (4,500). From these 30,000 SMOON tokens the trader sells, 10% of the amount (3,000) is shared between existing Stakemoon token holders as dividend payments.

Asides from that, 5% (1,500) of the 15% tax is allocated to Stakemoon’s liquidity pool; we’d go into details on this below.

As we’ve seen from the example above, 4,500 SMOON tokens are shared among existing Stakemoon token holders. Also, note that this amount is distributed proportionally to the percentage of the network governed by each participant (staker). So said, still from this example, if you control 5% of the total Stakemoon token circulation, you will get 5% of 4,500 SMOON tokens, which is 225 SMOON coins.

Essentially, the Stakemoon taxation policy has two-sided benefits. It doesn’t only chase off short-term and speculative day traders from transacting on the network for short-term profits. Also, it rewards stakers for holding their tokens for a long time span.

5% Liquidity Supply

One very vital factor in trading cryptocurrency in exchange is liquidity creation. This is because buyers and sellers will have a hard time finding each other without adequate liquidity in a pool. This can lead to ineffective marketplaces, unprofitable spreads, and increased volatility.

With this in mind, the 15% taxation policy is executed for all transactions, and out of that 15%, 5% is added to Stakemoon’s liquidity pool. Thus, making sure that the network facilitates transactions smoothly and effectively. Also, this provides a more competitive token price when partakers of the network choose to buy or sell the Stakemoon coin.

For example, users get excited when they see their crypto-asset investments grow by 10 times. However, if the token’s market doesn’t have enough liquidity, it’d be impossible to actualize this 10-fold increase. More simplified, if your invested crypto-assets don’t have sufficient liquidity in their marketplaces, selling at a different marketplace can cause you to sell at a lower price than you had seen.

So said, that 5% from the taxes on transactions will be used to provide more liquidity for the protocol. This, therefore, solves the above-mentioned problems associated with cryptocurrencies.

1-Years Liquidity Lock-away

Another benefit of partaking in Stakemoon’s liquidity program is that every newly added crypto token is stored for one year. In addition, the protocol is integrated with an automatic smart contract, which can be viewed by all users as soon as the liquidity pool receives some funds.

This implies that, when staking your tokens in Stakemoon, you cannot withdraw or unstake your tokens for one year. This locked period ensures that the token operates in an effective marketplace as time goes by.

Also to add, 50% of the entire pre-sale Stakemoon (SMOON) purchases that are facilitated Over-the-Counter (OTC) will be sent to the liquidity pool. All these transactions will also be locked up for one year and viewed via a smart contract.

Autonomous Liquidity Pools

One very practical benefit of the DeFi (decentralized finance) ecosystem is its Automatic Liquidity Pools. Automatic Liquidity Pools (ALPs) enable users within a market to buy and sell cryptocurrencies without a third party.

Now, supposing you possess the MAKER tokens and want to swap them for some Stakemoon. Usually, you’d need to send the MAKER coins to a centralized crypto exchange, then find the required market on the exchange, MAKER/STAKEMOON.

However, most centralized exchanges are unlikely to provide users direct marketplaces for coin pairs like MAKER and STAKEMOON. So, you will be required to sell your MAKER coins for any crypto asset with large market capitalization, such as Bitcoin or Tether. Then, using Bitcoin, you can purchase Stakemoon.

After this, you’d finally be able to send your Stakemoon coins to any desired crypto wallet.

As we’ve seen, this process is rather lengthy, time-consuming, and comprises various unfavorable transaction charges. Stakemoon provided users access to the Autonomous Liquidity Pools structure for a better option. This allows you to swap between various crypto assets without needing the presence of a third party or intermediaries for the transaction.

Rather, using the ALP, the buyer can purchase any desired cryptocurrency by just clicking a button. Also, the protocol will receive funds for all transactions being performed on the Automatic Liquidity Pool by executing these transactions. These funds will eventually provide liquidity for buyers and sellers and give them access to each other.

Also, Stakemoon token holders are encouraged to lock their tokens in the ALP because the crypto assets accumulate a massive interest. This implies that Stakemoon token holders can receive attractive annual returns for the time the tokens are stored in the ALPs.

The fees paid to users are from transaction charges paid by users of the ALP for token swapping. This idea introduces the Win-Win situation because the protocol doesn’t only accrue adequate liquidity levels for those hoping to join and leave the coin markets at fair prices. It also provides users considerable opportunities to leverage the ALP using the Stakemoon (SMOON) tokens.

How to Buy Stakemoon

Now that we’ve established the above, let’s consider the few steps to purchase the Stakemoon coin.

Step 1: Register on a Crypto Exchange

The foremost thing you’d need to do is purchase a primary cryptocurrency you will use to swap for the Stakemoon tokens. So, locate a cryptocurrency exchange like Binance, Coinbase, Uphold, or Huobi exchanges. Whatever exchange you choose, ensure that it can facilitate fiat-to-crypto transactions. Then, when you’ve located on, let’s say, Coinbase, sign up and complete the registration process.

When you’re done registering, they’d need to verify your account, so you will receive an email asking you to provide all necessary details. Do so. When you’ve finished confirming your account, you can now proceed.

Step 2: Purchase a Major Crypto Asset

After verifying your account on the crypto, you’ll be required to provide a payment method. You have access to various payment methods, including iDEAL, PayPal, Euro Bank Account, and Credit/Debit Card. Choose the option you’re acquainted with to proceed. For example, if you aren’t acquainted with anyone, click on the Credit/Debit Card option, then provide your card details. However, the card transaction will cost you higher fees depending on your country of residence.

Alternatively, you can use the Bank transfer option, which will be more affordable but much slower than the card payment option. Now that you’ve done that, select the Trade button at the top-left screen. Click on Bitcoin and proceed to confirm the transaction.

Step 3: Send the Coin to Any Decentralized Crypto Exchange

When you’ve successfully purchased your first crypto asset using the Exchange platform (in this case, Coinbase), you will need to exchange the BTC coin into SMOON alternatives. So, it’s worthy to note that the SMOON tokens are available on some compatible wallets that provide access to dApps (decentralized applications), like Metamask and Trust Wallet. So, ensure to download and sign in to Trust Wallet.

Then, click on the Bitcoin asset and click on the Receive option on the dashboard. Then click on the cryptographic characters to copy them. When you’re done with that, go to the Coinbase exchange app, navigate to your Bitcoin asset and select the Send button. Then input the cryptographic characters you had copied. Confirm the transactions and send the amount you desire when you’re done with that.

Step 4: Swap the Coin for Stakemoon (SMOON) tokens

After sending the Bitcoin tokens to your Trust Wallet, you need to convert them for Stakemoon equivalents. That said, on the dashboard, click on the dApps (browsers) section and select PancakeSwap. PancakeSwap is a decentralized cryptocurrency exchange that provides you access to tons of crypto assets.

When you’ve entered the PancakeSwap dApp browser, navigate to the Swap section at the middle left part of the screen. Then select Bitcoin and Stakemoon in the options for Swap from and to.

Once you’ve inputted the coins you want to convert from and to, then you’d need to connect your wallet to the DEX. Click on the Wallet icon on the top right of the app, then connect your wallet.

Conclusion

As we have seen, the Stakemoon crypto coin is an innovative Binance-based cryptocurrency asset that allows users to access an extensive array of financial tools. Its unique 15% taxation policy arises to discourage all short-term or speculative day traders from capitalizing on the Stakemoon protocol. Of that, 15%, 10% is allocated to rewarding token holders, whereas 5% is allocated to providing liquidity for the Stakemoon token.

Also, you’ve seen the steps by which you can buy the Stakemoon crypto coin.