Conceived simply as an elaborate joke and commentary on the crypto landscape, meme coins have far exceeded their initial expectations. As of 2023, meme coins have an impressive market capitalisation of $14.9 billion, an inconceivable achievement for this industry several years ago.
Shiba Inu is the second most popular meme coin on the market, defying all expectations and building a growing ecosystem around its not-so-serious foundation.
This article will discuss the recently launched blockchain of Shiba Inu called Shibarium.
Understanding the Shiba Inu (SHIB)
Shiba Inu (SHIB) coin was launched in August 2020. SHIB was created to capitalise on the surging hype surrounding meme cryptocurrencies. The most successful coin in this niche was Dogecoin, initially launched in 2013 as a parody of the cryptocurrency industry. However, Dogecoin unexpectedly gained a massive following and garnered global attention in 2020.
The creators of Dogecoin purposefully constructed the entire currency to be cumbersome and ridiculous. The random reward distribution for miners and an astronomically high count of coins were among the several attempts to make the entire project as ludicrous as possible. However, despite these factors, Dogecoin surged in popularity due to the growing community and the real-world value in financing fundraisers. Looking at the success of Dogecoin, several other creators decided to enter the niche of meme coins.
SHIB coin was one of the first entrants in this newly minted crypto niche, taking the industry by surprise and quickly accumulating a valuation of $4.7 billion. However, the creators behind Shiba Inu had different aspirations compared to Dogecoin. In the case of SHIB, the project was designed with the purpose of creating a community-focused crypto project that simplified peer-to-peer crypto payments and emphasised decentralisation.
Moreover, the Shiba Inu features a robust ecosystem of DeFi protocols and aims to enter other sectors of the blockchain landscape. SHIB also offers a variety of tokens with different utilities aside from the primary Shiba Inu token. With all of these features and benefits, Shiba Inu coin aims to become the first meme coin to truly transcend its roots and create a unique crypto project with a thriving community. However, the SHIB creators also refuse to take themselves completely seriously and believe their project should focus on fun and creativity.
What is Shibarium and How it Affects Shiba Inu Ecosystem
While the SHIB token has a separate ecosystem and utilities, it is built on the Ethereum blockchain network. Thus, the efficiency, speed, and transaction fees of the Shiba Inu ecosystem are directly tied to Ethereum's capabilities. Therefore, without layer-2 protocols enhancing the underlying technology, the Shiba Inu coin could be left in the oversaturated layer-1 of the Ethereum ecosystem.
As of 2023, the mentioned layer-1 of Ethereum has become increasingly crowded, which is a problem for all Ethereum-based coins and decentralised applications. However, the concern is even more dire in the case of platforms that support active peer-to-peer transactions, as the transaction fees, periods and bandwidth are progressively deteriorating on the layer-1 protocol. To offset this downward momentum, the Shiba Inu community took matters into their own hands and started building a layer-2 solution, aptly called Shibarium.
The conception of Shibarium has joined a massive wave of layer-2 solutions aiming to alleviate the growing concerns with the speed, scalability and efficiency of Ethereum. Thus, the Shiba Inu community eagerly awaited the Shibarium's commencement, as it signalled the new chapter for the SHIB coin development. Many community participants believe that Shiba Inu can facilitate the popularisation of blockchain across the globe, inviting a new audience to try out its offerings and potentially convert their funds into SHIB.
Since the Shibarium chain is a layer-2 solution, it can effectively offload the transactions from the main Ethereum chain, resulting in much faster and cheaper transactions for the entire SHIB community. Thus, the Shibarium network will elevate the core capabilities of the SHIB coin ecosystem without jeopardising the underlying security and decentralisation benefits.
The Inner Workings of Shibarium Ecosystem
As discussed above, the Shibarium network is designed to take SHIB transactions off the Ethereum mainnet, increasing the speed and efficiency of operations. Moreover, Shibarium will facilitate decreased gas fees, as layer-2 protocols require fewer resources to create new blockchain nodes.
Speed, Efficiency and Utility
Since the layer-1 Ethereum chain still has issues processing thousands of transactions in seconds, the layer-2 upgrade can effectively skyrocket Shiba Inu's efficiency. As a result, users can execute transactions in a fraction of the time, which means minutes instead of hours.
Additionally, Shibarium's launch will dramatically reduce gas fees. Currently, the Ethereum network has become almost unreasonably expensive due to network saturation and increased resource requirements. Users wishing to process small transactions might experience gas fees considerably higher than the principal transaction amount. Naturally, this trend has been detrimental to the crypto market as users try to minimise their transaction volumes to avoid excessive commission fees.
As a result, excessive gas fees limit the free market movement of crypto transactions, hampering the potential of the entire industry. With Shibarium's layer-2 capabilities, gas fees will revert to their normal size, which should ideally be a small fraction of the principal amount.
Finally, the Shiba Inu community has long been concerned about the lack of functionality and utility of the SHIB ecosystem. Before the Shibarium update, SHIB coins were largely speculative. While being a speculative currency is not inherently negative, it can pose significant threats to the overall valuation and growth of the crypto asset. After all, with no underlying utilities, the SHIB's success depended entirely on the market popularity, which could swiftly decrease at any moment.
The Shibarium Consensus Algorithm
Aside from the mentioned benefits, the Shibarium network utilises an effective block validation mechanism. In order to validate new blockchain nodes, the majority of users should be in agreement that the proposed block is valid and safe. As a result, Shibarium has managed to avoid utilising an energy-intensive consensus mechanism, which further increases the network's effectiveness and speed.
All validators and delegators must stake at least 10,000 Bone coins to be eligible. After that, the custom algorithm will randomly grant the validating rights to parties, keeping the block validation process fair and accessible to all parties. Thus, the Shibarium network's consensus algorithm almost perfectly mimics the proof-of-stake methodology, one of the most progressive validating processes available in the crypto market.
The Growing Shibarium Ecosystem
With the launch of Shibarium and the growth of the SHIB community, the project lead highlighted the importance of creating a fully-fledged ecosystem that supports various blockchain technologies. To incentivise innovation on the Shibarium network, creators have created simplified opportunities for developers to create decentralised applications on the Shibarium platform.
The two main sectors attracted to the Shibarium platform are the metaverse and crypto gaming markets. The Shiba Inu community and creators support this incoming wave of creators, believing that the Shibarium network will flawlessly accommodate their requirements. With layer-2 technology catalysing the SHIB ecosystem, creators can build decentralised applications with lower costs, higher speed and robust functionalities provided by the Ethereum network.
Shibarium Bone Token
To facilitate its fast-growing functionalities, the Shibarium network introduced its native token called Bone. The Bone token effectively serves as the governance token for the Shiba Inu community. As the creators of the Shiba ecosystem emphasise the community-driven approach, it was important to launch a separate token that simplifies numerous governance activities.
With the Bone token, the SHIB community members can vote in various decision-making processes. The voting rights are distributed fairly, and the platform has appropriate safeguards against the monopolisation of coins. However, at this point, with 250 million units of Bone, monopolisation is not a prevalent issue. Thus, the future and progression of this Dogecoin killer’s community are determined democratically and without any barriers to entry. The Shiba Inu ecosystem creators also utilise this governance token to let community members approve the new developments and proposals.
Shibarium Launch: Expectations vs. Troubling Reality
With hefty expectations and a promised second generation of the Shiba Inu ecosystem, Shibarium had a tough mission at launch. The project was planned for over a year, and the growing community around the SHIB coin awaited it eagerly. However, as August 16th was finally upon us, the Shibarium launch did go as planned.
Despite several delays and fixes for almost a year, the Shibarium network launched with crippling issues. First, the transaction processing speed slowed down immensely, amounting to several hours instead of minutes. Secondly, the network users reported issues with bridging, which is a process of connecting different blockchain networks. As a result, users were not able to transfer their funds from other networks or connect their wallets to the Shibarium network.
Thus, many experts speculated that Shibarium launched with faulty underlying technology, servers and protocols, unable to satisfy the promised functionalities. However, according to the Shibarium developers, the launch failed due to an unprecedented inflow of transactions and network participants. While the Shibarium network was equipped to handle millions of transactions, the developers simply did not expect to experience such busy traffic.
Shortly after the troubling launch, the Shibarium project lead, Shytoshi Kusama, reported that the Shibarium network was undergoing rigorous testing, with an additional failsafe being added to eliminate potential system breakdowns. Despite the reassurance from the development team, SHIB's price and market capitalisation dropped significantly compared to August 16th. In a matter of days, Shiba Inu's price declined by 30%, and the market cap went from $6.2 to $4.7 billion.
While the Shibarium creators are hard at work to deliver an optimised system, many believe that a critical blow has already struck the future potential of Shiba Inu. As the prices continue to plummet, it will take considerable effort to revert this unfortunate trend.
However, even if Shibarium creators manage to deliver an optimised platform with robust functionalities, the public perception has already been established. While the number of connected wallets to Shibarium has reached up to 10 million, and there are 1.3 million wallets holding the SHIB coin, the price continues to go down. The Shibarium's fortune could be reversed in the following days if the re-launch is successful, but it will be challenging to replicate the hype surrounding the initial launch date.
Future Implications for the Shibarium Ecosystem
While Shibarium's long-term goals and aspirations are commendable, the recent developments surrounding the launch and subsequent price decline are concerning, to say the least. Conceived as a meme coin that aimed to create massive value, robust functionality and a multi-faceted ecosystem, Shiba Inu is currently at a crossroads.
The following weeks will be crucial in the overall success or failure of Shibarium's roadmap. If successful, Shibarium could transform the ecosystem into a fast, low-cost and efficient platform that supports decentralised applications and smooth transactions. Conversely, if the minds behind Shibarium fail to remedy the platform issues swiftly, the Shiba Inu community could rapidly lose steam and join the ranks of numerous unsuccessful crypto projects.
While the challenge ahead seems steep and unforgiving, the latest news from the Shibarium's development team is encouraging, as the testing phase nears finalisation and numerous safeguards have been added to prevent future network stoppages.
Final Takeaways
As a flagship member of the meme coin niche in the crypto market, the Shiba Inu ecosystem had a lot to prove in 2023. The transition to a more prominent and crucial player in the crypto industry, SHIB coin, needed the Shibarium launch to be a success. However, the initial launch proved to be a failure, with numerous investors and traders selling the tokens en masse.
Yet, there's still a chance of recovery if the Shiba Inu creators provide a swift re-launch and deliver on the initial promises of the brand-new Shibarium platform. The following weeks will dictate whether the Shiba Inu ecosystem will reach its full potential.
