Explaining How Shibarium Can Burn Trillions of SHIB Tokens
Shiba Inu’s layer-2 network, Shibarium, was one of the most anticipated launches within the crypto industry in 2023. However, the launch didn’t go as smoothly as planned. Excess traffic led to the network being paused and although it has long since gone back online, even today the team is constantly releasing new updates and improvements.
In 2022, a Shiba Inu community member who goes by the handle ‘Queenie,’ projected that the Shibarium burn portal could incinerate 111 trillion SHIB tokens annually. In January of this year, the Shiba Inu community witnessed the burning of approximately 9.9 billion SHIB tokens. That burn alone removed about $88,348 worth of SHIB from circulation. However, current burns are usually only in the low millions per day. The Shibarium layer-2 network was touted to burn trillions of SHIB tokens but is yet to initiate large-scale burns.
Anyone can run hypotheticals from current data 🙂
I did this just now: pic.twitter.com/iSeKJeB9V9— Queenie (@Web3Queenie) March 31, 2022
What is Shibarium?
Shiba Inu is a token, and Shibarium is a Layer-2 to the Ethereum blockchain. It will make more use of the three tokens within the Shiba Inu ecosystem – $SHIB, $BONE and $LEASH – and connect them into a more closely-knit system. Shibarium promises better scalability and utility for metaverse, gaming, Web3, NFTs, and DeFi projects. One of the first dApps on Shibarium (and a strategic one at that), is ShibaSwap, turning the DEX’s native token $BONE into the native token of Shibarium.
Shibarium & SHIB Burn Mechanics
Even though Shibarium gas fees are paid in $BONE, the transactions on this network incur an implicit burn on SHIB. We even wrote an article dedicated to the burn rate mechanics and impact of burning Shiba Inu coins. It’s implemented as a buyback and burn funded by 70% of all the Shibarium network base fees.
70% might sound like a lot, but keep in mind that the transaction fees on Shibarium are intentionally kept low. Instead of speeding up the process with hefty commissions, the developers opted to keep the entry barrier low and make up for the minuscule individual burn fees with higher network activity.
What Happens If 100 Trillion SHIB Is Burned Each Year?
If Shibarium burns 100 trillion SHIB tokens a year, 500 trillion coins in circulation will be sent to the dead wallet over the next half decade. That’s removing 90% of tokens over the next five years. The development would leave SHIB with another 49 trillion tokens in circulation. If that were to happen, it could only help SHIB reach a price point of approximately $0.0001 to $0.0003.
Shiba Inu reaching $0.01 with this many burns is not really possible because there simply isn’t that much money in the markets. For example, Apple Inc. has a market cap of $286 trillion and Microsoft’s market cap stands at $3.02 trillion. These two tech giants are world-renowned companies that produce technology in the real world.
SHIB is only an ERC-20 token and would need to beat Apple, Microsoft, Tesla, and Google’s Alphabet in combined market cap in order to reach the $0.01 mark. Shiba Inu’s market cap must reach $500 trillion to even consider hitting the $0.01 milestone.
Therefore, SHIB would only have a chance at reaching the $0.01 mark if roughly 99% of its circulating supply were to get burned. Even removing 90% of all tokens in circulation might not be enough for it to reach the $0.01.
