By Key Points
- Shiba Inu burn rate plummets by 100%, with no tokens burned in the last 24 hours.
- Shibarium’s automated burn mechanism fails to boost the burn rate as expected.
- Network activity and transaction fees on Shibarium decline significantly.
- SHIB on-chain metrics show a bearish trend, with whale activity dropping.
Shiba Inu (SHIB) has once again hit a significant roadblock as its burn rate has dropped to zero, marking a 100% decline over the last 24 hours. The last recorded token burn happened on August 13, 2024, when 802,246 SHIB tokens were incinerated.
This drastic decline in the burn rate raises concerns among investors and the community, especially considering the promising launch of Shibarium’s automated burn mechanism, which was expected to sustainably reduce the supply of SHIB tokens over time.
Shibarium’s Automated Burn Mechanism Fails to Deliver
The Shibarium network, a layer-2 solution for Shiba Inu, recently transitioned to an automated burn mechanism, where 70% of the base transaction fees are converted to SHIB and subsequently burned.
The goal was to create a deflationary environment for SHIB, which would, in theory, increase its value by reducing the overall supply. However, this has not translated into the expected increase in burn rate.
One of the primary reasons for this shortfall seems to be the low transaction volume on the Shibarium network. Data from Shibariumscan reveals that daily transactions have stagnated, fluctuating between 3,000 and 8,000 over the past month.
This is a stark contrast to the high of around 5 million daily transactions recorded in December 2023. For example, on August 15, Shibarium generated a mere 6.8 BONE (equivalent to approximately $2) in transaction fees.
Such low fees make it impractical for the team to implement regular automated burns, as there simply isn’t enough transaction volume to support the process.
Shiba Inu’s Burn Rate Drops by 100%, What Is Going On? https://t.co/9QLalNztIq pic.twitter.com/tp0pZUS18E
— JaguarDigital (@JaguarDigi16) August 17, 2024
On-Chain Metrics Reflect a Bearish Outlook
Shiba Inu’s on-chain metrics further illustrate the challenges faced by the meme coin. Data from IntoTheBlock, a leading market intelligence platform, shows a decline across several key indicators.
Large transactions, often a sign of whale activity, have dropped by over 14%. This decline suggests a waning interest among large SHIB holders, who typically have the power to influence market movements.
Additionally, the percentage of Shiba Inu holders who are currently “in the money”—or holding at a profit—has decreased to 45%. This means that more than half of the SHIB holders are now holding their tokens at a loss, further dampening sentiment around the token.
Coupled with the ongoing decline in net network growth, which reflects the rate of new investors entering the ecosystem, the outlook for Shiba Inu appears increasingly bearish.
What’s Next for Shiba Inu?
At the time of writing, Shiba Inu is trading at approximately $0.00001338, down nearly 2% in the last 24 hours, according to CoinMarketCap. This price dip aligns with the broader trend of declining interest and activity within the Shiba Inu ecosystem.
The sharp drop in burn rate, combined with the lackluster performance of Shibarium’s automated burn mechanism, raises questions about the long-term viability of SHIB as a deflationary asset.
For Shiba Inu to regain momentum, several factors need to align. First, the transaction volume on the Shibarium network must increase significantly to generate enough fees for meaningful token burns.
This could be driven by the development of new use cases, partnerships, or improvements in network efficiency that attract more users and developers to the platform.
Secondly, the Shiba Inu community and development team may need to explore alternative methods for reducing the token supply, such as community-driven burn initiatives or integrating SHIB into more decentralized finance (DeFi) protocols that can offer higher yields and incentives for holding or using SHIB.
In conclusion, while the current situation may look grim for Shiba Inu, the project has shown resilience in the past. The upcoming months will be critical in determining whether Shibarium can fulfill its potential and whether the SHIB token can regain its position as a top-performing cryptocurrency.
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