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Shiba Inu (SHIB) has long been dismissed as a meme coin project without any fundamental utility. However, the project’s meme characteristics are on course for a foundational shift when the Shibarium Level 2 (L2) blockchain launches later this year.
Shiba Inu’s SHIB coin has been built on Ethereum’s ERC-20 protocol for tokens. As a refresher, a token is simply a digital representation of an asset or a specific use-case on a blockchain. On the other hand, a coin is usually the native token on a specific blockchain. For instance, Ether is the native coin on the Ethereum blockchain. The ERC-20 protocol standardizes the issuance of fungible tokens in order to enable universal compatibility with the wider Ethereum network.
As Shiba Inu leverages the ERC-20 protocol, the project has to engage with the Ethereum blockchain, thereby becoming a victim of Ethereum’s relatively slow transaction throughput and the attendant high transaction processing fees (also known as gas fees). After all, this issue also slowed the uptake of the Shiboshi NFTs.
We’ve continued to note that Shiba Inu’s developers are working to create more avenues of utility for the holders of the SHIB, LEASH, and BONE coins. The project already entails a native decentralized exchange (DEX), dubbed the ShibaSwap, which rewards SHIB holders based on the total swaps taking place on the DEX. Moreover, SHIB holders can also buy goods online via NOWPayments, and BitPay now allows companies such as Newegg and AMC Entertainment to accept payments in SHIB coin.
However, the biggest project that is currently in the works relates to ShibaNet, a completely decentralized marketplace that would allow the Shiba Inu community to exchange goods and services seamlessly. Given Ethereum’s high gas fees, the project is not viable at this stage. It is for this reason that Shiba Inu developers have been working on Shibarium, a Level 2 solution that would circumvent Ethereum’s high gas fees.
Basically, the L2 is an entire protocol that is built on top of the Ethereum blockchain. The protocol interacts with the main blockchain via smart contracts – programs that automatically execute actions when certain conditions are met. While details are scarce at the moment, Shibarium L2 is likely to leverage Rollups to improve transaction processing efficiency. As a refresher, Rollups are solutions that aggregate and process transactions on another layer that is outside of Ethereum’s main blockchain. These processed transactions are then bundled and posted on the main chain, thereby circumventing Ethereum’s high gas fees issues.
Moreover, Shiba Inu’s Shibarium L2 will use BONE as its native tokens and not the SHIB or LEASH coins. The BONE coin will be initially priced at $0, with subsequent pricing depending on the market demand/supply dynamics. Nonetheless, SHIB and LEASH holders will be able to use their holdings to yield the BONE coin on ShibaSwap.
Coming back, the ShibaNet will actually use a stablecoin, known as SHI, pegged at $0.01 or 1 cent. By removing the price volatility associated with the SHIB coin, SHI would significantly enhance the ease of doing business within the Shiba Inu ecosystem.
This brings us to the crux of the matter. None of these initiatives would gain significant traction in the absence of the Shibarium L2 facilitating efficient transactions. Back in December 2021, Shiba Inu AMA revealed that Shibarium would most likely launch in the first half of 2022. Consequently, we expect a significant increase in the overall activity within the Shiba Inu ecosystem toward the end of H1 2022 and into H2 2022 should the current timeline for the Shibarium L2 hold.
Of course, network activity (transaction volume) has a significant correlation with crypto price gains. For Shiba Inu, the Shibarium L2 just might be the stimulant required for a fresh bullish impulse.