One of the most popular meme-based cryptocurrencies, Shiba Inu (SHIB), has received both popular and positive coverage not only because of the community-built principle but also due to the extremely large number of tokens. In a bid to address the problem of oversupply and create scarcity, SHIB developers and SHIB members started to burn the coins. This article will summarize the history of SHIB as an entity that was burned, how it changed over time, and why it is relevant in the Shiba Inu ecosystem.
Table of contents
Launch of Shiba Inu
Shiba Inu was released in August 2020 with the idea of a decentralized community-building experiment in mind. At the time of its launch, its creator, who goes by the pseudonym Ryoshi, minted one quadrillion SHIB tokens, an intentionally massive supply. While one half of this total supply was deposited in Uniswap to supply liquidity, the remaining half was sent to Vitalik Buterin, who was one of the Ethereum co-founders. There was no formal burning plan at this point, but with excessive token supply in the market, the community began discussing the burning strategy to diminish the amount of tokens in supply.
Vitalik Buterin’s SHIB Burn
After receiving the tokens, Buterin decided to burn nearly 90% of them, which amounts to over 410 trillion SHIB, worth more than $6 billion at the time. He sent the tokens to a “dead wallet”, an inaccessible address where tokens are permanently removed from circulation. This was a major moment for SHIB. Overnight, over 41% of the total SHIB supply was destroyed, and Buterin explained that he didn’t want to hold that much power over a community-led project and believed it was better for the ecosystem if the tokens were burned.
Rise of Community-Led Manual Burns
After Buterin burned the tokens, the community followed his example and began to manually burn SHIB to reduce the token supply. Further, several small businesses, NFT creators, and even influencers and content creators sent SHIB voluntarily to burn addresses to indicate their commitment to the community. Some businesses started to allocate a portion of their SHIB-related revenue for burning. Music royalties, merchandise profits, and even coffee sales were tied to SHIB burn commitments. The idea was simple, which implied that if more SHIB tokens were burned, it would become more scarce, potentially benefiting holders over time.
Launch of the ShibaSwap Burn Portal
In April 2022, the Shiba Inu team launched the SHIB Burn Portal on ShibaSwap. Apart from simplifying the process of burning tokens, the portal provided users with rewards, wherein each one received a burnitSHIB token, which provided compensation in the RYOSHI token. The portal had a good start, and in the first week, nearly 20 billion SHIB were burned in it. The system turned the burning concept into a game and stabilized the informal and community-based initiatives.
As the interest in SHIB burning increased, monitoring and visualizing burn data tools were created to keep track of and visualize real-time burn data. Websites such as Shibburn.com and Shiba Burn Tracker started to monitor daily, weekly, and total burns. These sites also displayed addresses used in burn transactions and supply changes that it attracted. Such transparency and community involvement also emboldened holders and projects to burn.
Development of Shibarium and Automatic Burns
While manual burns continued, the Shiba Inu development team built a Layer-2 blockchain called Shibarium, aimed at improving scalability and lowering gas fees. One of the key features planned for Shibarium was the integration of automatic SHIB burns. On the Shibarium testnet (dubbed Puppynet), developers conducted a trial, wherein 70% of the base transaction fee collected in BONE (Shibarium’s gas token) would be converted into SHIB and then burned. The idea was to build burns directly into the blockchain’s activity, creating a sustainable and automatic burning mechanism.
Shibarium Mainnet Launch (August 2023)
In August 2023, Shibarium went live on the mainnet. With its launch came the implementation of the automated burn system. Every transaction on the network contributed a portion of fees toward SHIB burns, which meant that more people were involved with the network for swaps, NFTs, or staking, following which the surplus SHIB would be destroyed in a short time.
Massive Burn Rate Spikes
Following the mainnet launch of Shibarium, the development team executed gas improvement optimization to refine the SHIB burn mechanism. In October 2023, a single burn transaction of 8 billion SHIB skyrocketed the burn rate to over 7,000,000% within 24 hours. This shook the entire SHIB community as it demonstrated the strength of Shibarium and its automatic burn mechanism. As the percentage was high, despite the low base, it highlighted the potential scaling activity, thus signaling a longer-term token burn.
Sustained Weekly Burns
By early 2024, Shibburn trackers reported weekly burns that exceeded 500M SHIB, fueled by Shibarium’s automatic burns and manual contributions. On several occasions, the weekly burn rate rose over 500%, especially during periods of high transaction volume on Shibarium. Until now, over 410 trillion SHIB have been burned by late 2024, starting from Buterin’s initial move and continuing to the contributions of the community and the network.
What are Dead Wallets?
They are the burn addresses to which the SHIB tokens are sent to be permanently removed from circulation. These Ethereum addresses do not have any private keys, which implies that the tokens cannot be accessed or retrieved once they are sent. Although the are several burn addresses, a majority of SHIB tokens are sent to an address that was used by Buterin in 2021. Apart from that, Ethereum’s black hole (zero address) and designated community burn addresses are used. Compared to other addresses, these effectively burn the SHIB tokens, thus contributing to the token’s long-term scarcity model.
Final Thoughts
Shib burning has been a slow process, from Buterin’s dramatic burn action in 2021 to community burns, and finally, a burning method automated in Shibarium. This development indicates the shift towards a more sustainable system-based approach to supply management. As the ecosystem expands, the burn mechanism plays a strategic role in shaping SHIB’s tokenomics. While burning doesn’t ensure price growth, it helps to promote long-term scarcity and value alignment.
Disclaimer: The information presented in this article is for informational and educational purposes only. The article does not constitute financial advice or advice of any kind. Coin Edition is not responsible for any losses incurred as a result of the utilization of content, products, or services mentioned. Readers are advised to exercise caution before taking any action related to the company.
