Should I invest in Shiba Inu?
Should I invest in Shiba Inu?

  Origins: What is Shiba Inu?

Shiba Inu was launched in August 2020. The so-called meme coin is a play on the Dogecoin (DOGE) meme, which is itself a parody on cryptocurrency in general. Coins themed around the Shiba Inu breed of dog from Japan (“inu” is Japanese for dog, gained popularity in 2021 as investors looked for the next multi-bagger crypto to invest in. This year has proven extremely difficult but a recent move has seen large wallet investors on the Ethereum blockchain scoop up more than 855 billion Shiba Inu tokens, frequently seen as a sign that a bullish trend is around the corner.

Shiba Inu is built on the Ethereum (ETH) network and its native token, SHIB, is an ERC-20 token.

According to its website, Shiba Inu initially had a supply of one quadrillion tokens. Half of the total supply was locked in the Ethereum-based DEX Uniswap while the other half was sent to Ethereum’s co-founder, Vitalik Buterin, “for safekeeping”.

In July 2021, Buterin donated 50 trillion SHIB coins, which represented 5% of its total supply, to India’s Covid-19 relief fund. Buterin also sent 40% of Shiba Inu’s total supply to a “dead wallet”, which is also referred to as burning, according to Shiba Inu’s website.

The project has evolved from the SHIB decentralised meme token into an ecosystem that incorporates the LEASH and BONE tokens. Shiba Inu’s network also has a decentralised exchange (DEX) called ShibaSwap and a non-fungible token ( NFT) incubator called the Shiba Incubator.

Shiba Inu has additionally set up a non-profit volunteer organisation called the Shiba Inu Rescue Association, which is dedicated to saving abandoned, neglected and abused Shiba Inu.

Read More:Is mining Shiba Inu profitable?

  What is Shiba Inu Token?

Shiba Inu was founded by an anonymous person with the pseudonym Ryoshi. Shiba is an ERC-20 token on the Ethereum network, which allows the developers to build the ShibaSwap DEX and integrate other tokens and NFTs into the platform’s ecosystem. The maximum supply of Shiba was set to 1 quadrillion tokens, which is much higher than most cryptocurrencies. The enormous token size caused Shiba’s price to be much lower than most assets with similar market capitalizations.

Half of the minted Shiba were locked into Uniswap to reward liquidity providers in Shiba pools on the DEX. The other half were sent directly to Vitalik Buterin, the visionary developer who founded Ethereum. Ryoshi’s intention was to burn the tokens, hoping that Buterin wouldn’t sell them, which would make the Shiba token basically worthless. By May 10, 2021, Buterin’s 500 trillion Shiba was worth billions of dollars, way more than any other token in his wallet (and he was already a billionaire in his ETH holdings alone).

Buterin realized that he could make an enormous impact in the world with the money and decided to donate 20% of his Shiba (100 trillion Shiba worth over $1 billion – 10% of its total supply), split between two charities. One of the charities wasn’t named, and the other is the India COVID-Crypto Relief fund. This gift was one of the largest single donations ever made with cryptocurrency and brought legitimacy to Shiba and the cryptocurrency market as a whole. It had a fascinating effect on Shiba Inu because it meant that a large portion of the supply would be sold by the charities, decreasing the price, while the donation drove tons of attention to the coin, driving the price back up.

  Shiba Inu vs. Dogecoin

Shiba Inu is built on top of Ethereum, which means it can take advantage of smart contracts to create much more advanced applications, like DEXs and NFTs. The token released their ShibaSwap DEX back over the summer, and they have recently released “Shiboshis” which is a collection of 10,000 NFTs. Dogecoin’s code is based on Bitcoin’s and lacks compatibility with smart contracts. Due to this, Doge can only be used as an internet currency, a speculative investment and as an (unstable) store of value.

ShibaSwap adds new ways to use Shiba tokens, providing more value to its users. ShibaSwap launched with incentivizes for new users to buy Shiba tokens and stake them in liquidity pools, helping adoption of the DEX. However, this tactic is nothing new on the Ethereum network. Many decentralized applications (dApps) already provide staking pools, and when the liquidity mining incentives run out, there will be some sell pressure.

Shiba Inu and Doge are currently competing to be the goodest boy. Right now, Dogecoin is in the lead. Will the Doge army be able to come back? At the time of writing, Dogecoin’s market capitalization is about $7.8 billion, as compared to Shiba Inu’s $5.4 billion market cap.

  What is ShibaSwap?

The long-awaited ShibaSwap platform launched in July 2021, offering a multitude of features. The Dig feature allows users to provide liquidity (deposit tokens) to the DEX in exchange for BONES. Staking in any of these pools may earn a large amount of interest over time, but 66% of the returns will be locked for 6 months. This rule will keep stakers on ShibaSwap from selling off a large portion of their newly acquired tokens immediately and should help to keep their prices up.

The Bury tool allows users to stake SHIB, LEASH and BONE to earn passive income on your tokens. It is not entirely clear where the Bury interest comes from – most likely new issuance, which may cause inflation. ShibaSwap should certainly be considered when deciding whether Shiba Inu is a good investment, but it is far from the only factor. In fact, a single tweet from Elon Musk could be dramatically more impactful than the platform itself.

On the ShibaSwap launch day, Discord Admin Shiba Cat, stopped by Benzinga’s “Moon or Bust” to dive deep on the DEX. Watch below.

  Is Shiba Inu Safe?

Shiba Inu is not a safe investment by any traditional standards. Shiba Inu could be a fantastic investment but only if the meme can stay alive and see an eventual resurgence. SHIB is a classic high-risk high-reward investment. While massive gains are possible if ShibaSwap rises in popularity, Shiba doesn’t add anything novel to the decentralized finance (DeFi) ecosystem. This may change after it releases its Layer 2 network but until then it’s little more than a doggie-branded meme coin. It can still have more use cases than Dogecoin because it’s on the Ethereum network, but that doesn’t mean it will perform any better. It will likely come down to who promotes it and how much hype they can bring back to the token.

There are also distinct security risks in depositing cryptocurrencies into anonymous projects like ShibaSwap because the code may allow the developers to scam investors out of their cryptos. Scams that cost users millions of dollars are becoming more and more common in the wild west that is DeFi. This possibility can be ruled out by experienced code auditors if they can access the code, but ShibaSwap hasn’t been audited yet.

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