Consolidation vs Reverse Split
Consolidation
Reverse Split
Consolidation comes into play to reinforce the trajectory of the project and to help reach its predefined goals.
Reverse splits generally take place when a project needs to enhance its status, often at the risk of losing a substantial reputation in its field.
In traditional markets, reverse splits frequently transpire when a project is on the brink of losing its standing on a significant platform and needs to improve its status to prevent such an occurrence.
However, within the realm of DeFi, the notion of CONSOLIDATIONS, although analogous, is employed for different reasons. The prevailing consensus indicates it's beneficial for the project participants. Let's dive into a more relatable explanation of what it means and its implications.
Envision DeFi Consolidation and Reverse Split as changing the way you organize a library. At its core, the books (tokens) remain the same, but the method of organization and how many books fit on a shelf (supply) changes.
Consolidation effectively "removes zeros" by diminishing the supply. In this scenario, we'll consider a ratio of 1000:1 (a ratio that appears popular in the community as it ensures compatibility across various platforms).
The process basically tidies up the numbers. The key difference is that each SFM token's significance will be 1000x greater. Consequently, you'll have fewer tokens, but the total amount of your holdings stays the same at the time of migration.
This happens because you maintain the same percentage ownership of the new SafeMoon v2 supply as before. For instance, if you own .002% of all SafeMoon today, rest assured that after the consolidation, you will continue to hold .002% of the total supply.
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