Shiba Inu (SHIB) has become one of the most prominent cryptocurrencies, not only due to its popularity but also because of its unique token burn mechanism. This mechanism not only reduces the supply of SHIB but also has a significant impact on its value. In this article, we will explore how the SHIB burn mechanism works and the impressive numbers related to this process.
1. What is Shiba Inu Burn?
Shiba Inu (SHIB) is a standout cryptocurrency within the digital currency community, especially due to the rapid development of its “token burn” process. Since its launch in August 2020, SHIB has garnered significant attention, not only for being a “meme coin” but also for its dramatic shift in supply management strategy. One of the key factors that has brought SHIB into the spotlight is the increasing rate of SHIB token burns, which at one point saw a growth rate of up to 500% in a single day. This has certainly caught the eye of many investors and cryptocurrency enthusiasts.
With an initial supply of one quadrillion (1,000,000,000,000,000) SHIB tokens, the project has already burned over 41% of the total supply, according to data from Shibburn, a tool dedicated to tracking the SHIB token burn process. Over the past week, more than 500 million SHIB tokens have been removed from circulation, contributing to a reduction in the supply of this coin. As the SHIB community continues to focus on development strategies and token burns, understanding the burn mechanism and its impact on SHIB’s growth is crucial.
In this article, we will delve into the SHIB token burn mechanism, its burn rate and scale, the operation of the Shib burn tracking tool, and the long-term effects this process could have on the SHIB ecosystem.
2. How does Shiba Inu Burn work?
The Shiba Inu burn process, also known as SHIB burn, is a method aimed at reducing the number of SHIB tokens circulating in the market. Specifically, this process involves the destruction of SHIB tokens, which helps alleviate supply pressure and increases the value of the remaining tokens.
There are two common methods of burning SHIB: manual burn and automatic burn.
- Manual Burn: This is the traditional method, where users send SHIB to a special “burn address” that cannot be accessed again. The purpose is to intentionally remove tokens from circulation and reduce the overall supply in the market.
- Automatic Burn: Also known as “under-the-radar burn,” this mechanism operates automatically during transactions on the Shibarium network, Shiba Inu’s own blockchain. Specifically, each time a SHIB transaction occurs, a small portion of the gas fee from the transaction is used to burn SHIB tokens. This means that each transaction on the network gradually reduces the total number of SHIB tokens in circulation, creating a continuous and long-lasting burn mechanism.
3. Why does Shiba Inu Burn Coins?
The SHIB token burn mechanism was primarily created due to supply-related issues when the project was first launched. Unlike many other cryptocurrencies, which increase their circulating supply gradually through mining or staking methods, Shiba Inu was initially released with an enormous supply, totaling one quadrillion (1,000,000,000,000,000) tokens. Having such a large initial supply caused the value of each SHIB token to be very low, making it appealing to investors because the token seemed “cheap” and easy to buy.
However, investors who bought SHIB simply because of its low price without considering the market capitalization often had unrealistic expectations about the token’s value increasing significantly. Specifically, if SHIB were to reach a price of 1 USD, its market capitalization would exceed 580 trillion USD, a number larger than the total GDP of all countries combined. Clearly, this is an unrealistic scenario. Therefore, the only way the value of each SHIB token can increase close to 1 USD is through a significant reduction in its supply.
While burning tokens doesn’t directly increase the value of the coin, if this process is accompanied by a growth in market demand, the value of SHIB can be positively driven.
4. Where do burned SHIB tokens go?
When a certain amount of SHIB tokens is burned, they are transferred to special wallet addresses responsible for storing these tokens permanently, making them irretrievable. Currently, there are three main addresses used to burn SHIB tokens. These addresses were not created by the Shiba Inu development team but are part of the Ethereum network, which is also used to store other tokens.
The most well-known “burn” address is the one used by Ethereum co-founder Vitalik Buterin, who burned SHIB tokens worth up to $6.7 billion in May 2021. The second address is the one used by the Shiba Inu development team for listing SHIB tokens on ShibaSwap. The final address, known as the “Black Hole,” is linked to the origin address of Ethereum, a key part of the blockchain ecosystem.
5. What is the Shiba Inu Burn rate?
The Shiba Inu burn rate is a key metric that determines the rate at which the number of SHIB tokens in circulation is reduced over time. The higher the burn rate, the greater the number of tokens being destroyed, which helps reduce the overall supply. Conversely, a low burn rate means fewer tokens are being eliminated.
Investors and traders closely monitor the burn rate because it can directly impact their investment strategies. A high burn rate not only reflects strong community support but also boosts investor confidence, which in turn attracts more interest and increases the value of SHIB. However, if the burn rate suddenly spikes, it could lead to instability and speculation about SHIB’s future growth potential.
6. How many Shiba Inu Burn tokens have been burned?
As of now, a total of 410,709,225,391,335 SHIB tokens have been burned. A large portion of this amount is the result of Vitalik Buterin, the co-founder of Ethereum, burning 41% of the total SHIB supply. However, the Shiba Inu community has also made significant contributions to the token burn, with more than 180 billion SHIB being removed through community activities and the development of Shibarium.
Many token burn initiatives have been implemented, such as Bigger Entertainment, a cryptocurrency record label, which has burned over one billion SHIB through various campaigns, including SHIB Burner playlists. However, this company has since left the Shiba Inu ecosystem.
Additionally, there are other projects, such as NFT games, that use a Play-to-Burn model to reduce the SHIB supply. One notable example is Brick Burner by Travis Johnson, which has used advertising revenue to burn SHIB tokens, destroying over 2.5 billion SHIB to date.
Beyond community efforts, there are other burn activities taking place from various sources. While not everyone has kept their promise to burn SHIB, the contributions from the Shiba Inu community remain substantial. The most recent burn event, just 12 hours ago, saw a notable 100,500,000 SHIB being destroyed.
The SHIB burn mechanism not only helps reduce supply but also creates stability and growth potential for this cryptocurrency. Burn initiatives from the community and other projects continue to drive the development of Shiba Inu. This will undoubtedly be a key factor in maintaining the value of SHIB in the future.
