705 million SHIB was destroyed in the last seven days as community efforts to burn SHIB continue, but this number isn’t as high as you’d first think.
Looking at this number, 705 million SHIB represents just 0.00012% of the total 549 trillion SHIB in circulation. At this rate, it will take a whopping 150 years to burn just 1% of the circulating SHIB.
SHIB Burn Rate Is Too Low
The first issue with SHIB’s burn is the illusion that SHIB has, and is, burning large amounts of tokens. And that’s a fair assumption - for most other cryptocurrencies, 705 million coins would be an astronomical burn. The latest Binance Smart Coin burn destroyed 1.3m BNB, while EIP-1559 now sees Ethereum burn around 100,000 ETH every week.
Indeed, this has caused concerns in the community. Some members of the ShibArmy questioned why the total amount has barely moved.
It comes back to circulating supply (549 trillion), and SHIB’s price. 705 million SHIB is worth just $46,000. Given SHIB now has a market cap of nearly $36 billion, this doesn’t seem nearly enough.
What’s the second issue? Vitalik Buterin.
When SHIB first launched, it had a supply of 1 quadrillion SHIB. Ryoshi, the creator of Shiba Inu, sent 50% of this to the Ethereum founder. He subsequently destroyed 90% of this, sending 410,241,996,771,871 SHIB to the dead address.
When you subtract this number from the 410,296,701,502,013 SHIB burned as of today, just 547 billion SHIB has been burned since Buterin destroyed 41% of the supply.
547 billion SHIB is worth roughly $35.9m - or 0.1% of SHIB’s current market cap. That’s it.
One SHIB hodler gave a great simile for the current burn rate, comparing it to taking a cup of water from the ocean.
So, with burning SHIB vital to knocking the zeroes off SHIB’s price, what can be done.
Ultimately, the community burn efforts need to be a supplement to a more rigid, top-down burning approach. Transaction fees are the most obvious immediate solution, but would likely be met with immediate resistance. Ethereum’s disproportionate gas fees already add a hefty cost to Shiba transactions.
The upcoming launch of the Shibarium Layer-2, which intends to reduce these gas fees, is perhaps the best place to implement a significant, consistent burning mechanism.
Indeed, this Shiba team is making progress on this front. Any renaming of a Shiboshi NFT sees the owner burn $100 of SHIB. 3% of NowPayments’ profits from SHIB payments will go towards burning SHIB - the first at the end of November. These are all smaller steps in the right direction, but for a larger burn, drastic measures are needed.
[Image: Tobias Rademacher/Unsplash]