In recent weeks, Shiba Inu (SHIB), a meme-inspired digital currency, has garnered significant attention, primarily owing to the substantial surge in the amount of SHIB tokens being sent for burning. The Shiba Inu burn rate has witnessed a staggering daily increase as high as 500% — a phenomenon that has left many crypto enthusiasts and investors intrigued.
Shiba Inu, the project that began in August 2020 with a vast supply of one quadrillion SHIBs, has now burned more than 41% of its initial total supply, as per data from the SHIB burn tracker, Shibburn. Remarkably, the past week that just concluded saw over half a billion of Shiba Inu coin burning.
As the SHIB community becomes increasingly captivated by this development, it becomes essential to explore the intricacies of the Shiba Inu burn process. This feature article will delve deep into the mechanism of SHIB burn, the Shiba Inu burn rate, the Shib burn tracker, and the impact on the overall SHIB ecosystem.
What Is Crypto Token Burning?
‘Burning’ crypto is a process through which a certain amount of tokens or coins is permanently removed from circulation. This is done by sending the tokens to a ‘burn address’ from which they can’t be used or retrieved, effectively reducing the supply of the token. For the unlearned, a burn address refers to a wallet address with no known private key and is neither owned by anyone nor accessible to anyone.
Why Are Tokens Burned?
There are several reasons why cryptocurrency projects engage in this seemingly counterintuitive act of destroying their own tokens, each with its unique purpose:
- Burning tokens can cause scarcity, increasing the rarity of the remaining tokens.
- Burning tokens can help maintain a stable and predictable inflation rate.
- Burning tokens can drive up demand, potentially increasing the value of the remaining tokens.
How Does SHIB Burn Work?
The Shiba Inu burn mechanism, SHIB burn, simply refers to the process of burning SHIB tokens. The burning process is achieved through a combination of manual burns and an automatic mechanism integrated into the Shibarium network, Shiba Inu’s own blockchain.
While manual burn purposely removes tokens from circulation by sending them to a burn address, the automatic burn mechanism is intricately linked to the network’s transactions. Also known as implicit burn, in an automatic burn, for every SHIB transaction, a percentage of the transaction fee’s base gas fee is used to burn SHIB tokens. With every transaction, the total SHIB supply gradually dwindles, creating an intrinsic burn rate that endures as long as activity persists on the network.
Why Are SHIB Tokens Burned?
Given the vast number of SHIB tokens in circulation, Shiba Inu coin burning aims to create scarcity. As more tokens are burned, the supply diminishes, which, in theory, should put upward pressure on the value of the remaining tokens. This can also attract more investors and speculators, potentially driving further demand for SHIB.
In addition, a controlled Shiba Inu burn rate can contribute to the long-term viability of SHIB by preventing excessive inflation that may arise as more tokens are minted or distributed.
Where Do Burnt SHIBs Go?
Central to the SHIB burn mechanism are the wallet addresses responsible for storing the burned tokens. There are three SHIB burn addresses currently being used in burning SHIB tokens. These addresses are not created by the Shiba Inu development team, but rather are part of Ethereum and are used for other tokens as well.
One is the most commonly used burn address. It is the same address co-founder of Ethereum Vitalik Buterin used to burn $6.7 billion worth of SHIB tokens in May 2021. The second is the same one used by the Shiba Inu team for ShibaSwap listings. The last one, called the Black Hole, is associated with the Ethereum genesis address.
What Is Shiba Inu Burn Rate?
The Shiba Inu burn rate determines how many SHIB tokens are taken out of circulation over time. The higher the burn rate, the more tokens are destroyed. And the lower the burn rate, the fewer tokens are destroyed.
Investors and traders closely monitor the Shiba Inu burn rate as it can influence their trading strategies. A high burn rate might signify strong community support, boosting investor confidence and attracting more interest in SHIB. On the other hand, a sudden spike in burning could trigger speculation about the token’s future performance.
What Is SHIB Burn Tracker?
All the SHIB burn transactions are transparent and can be tracked on the Ethereum blockchain. SHIB burn trackers Shibburn and Shiba Burn Tracker are websites that provide real-time SHIB burn transaction records. These records include details about the burn addresses involved, the amount of tokens burned, and timestamps.
Shibburn provides users with information about the Shiba Inu supply, burn rate, amount of burnt SHIB tokens over the last 24 hours, and latest burn transactions. Meanwhile, the Shiba Burn Tracker provides a graphical representation that shows the last 30 days of SHIB burn transactions. In addition, it has tabs that show the current month and last month’s SHIB burn statistics and all SHIB burn transactions month by month since the beginning.
Does Burning SHIB Increase Value?
Notably, burning alone may not necessarily lead to a significant increase in value. Several factors come into play:
- Supply and Demand: The primary driver of a token’s value remains the interplay between supply and demand. A surge in SHIB demand coupled with diminished supply due to burning can amplify the token’s allure and price.
- Continuous Purchase Rate: Burning a massive number of tokens, like 10 billion, in a short period may not impact the price significantly if there are far larger transfers and daily purchases happening. It’s not just about burning; it’s about maintaining a balance with the current purchase rate.
- Liquidity and Adoption: token’s liquidity and adoption within the market form vital pieces of the puzzle. Even substantial token burning may falter to elevate the value if the token lacks liquidity and demand.
- Long-Term Perspective: A long-term perspective is essential for gauging a token’s success. Investors’ price expectations can diverge, and tokens need time to flourish, garner adoption, and potentially ascend in value.
In summary, burning SHIB can be a factor that contributes to its value, but it’s not a standalone solution. While burning can potentially increase a token’s value, it needs to be part of a broader strategy for sustained growth.