What is Shibarium and what does it mean for the Shiba Inu?

What is Shibarium?

Shibarium is an upcoming layer-2 (L2) blockchain network built on Ethereum for the Shiba Inu. It will transform Shiba Inu, a memecoin, into a complete ecosystem.

Ryoshi, the anonymous creator of Shiba Inu, proposed the Shibarium project in a now-deleted blog post in May 2021. The project intends to build a blockchain layer-2 solution on the Ethereum blockchain. The expansion will transform Shiba Inu from a memecoin into a comprehensive ecosystem that includes a decentralized exchange (DEX), a metaverse and blockchain games, such as Shiba Eternity.

Memecoins are cryptocurrency tokens depicted with comical or animated internet memes. Generally very volatile, these coins are largely driven by pop culture and have a large supply leading to high inflation. Shiba Inu (SHIB) itself has a total supply of 1 quadrillion, which is equivalent to 1000 trillion. The Shibarium portal aims to reorganize the Shiba Inu as a multi-project and a stable ecosystem.

Shibarium developers have not yet released a launch date for the project. However, an alpha preview of the SHIB metaverse, part of the project, was shown at SXSW 2023 from March 13 to 15. The release was originally planned for February 2023, but was delayed because the developers were keen to launch a bug-free version after thorough testing through various phases.

What does Shibarium mean for Shiba Inu?

The benefits of using Shibarium include higher transaction speeds, lower fees, increased token utility, and seamless decentralized application (DApp) development.

Despite the upgrade to a proof-of-stake (PoS) blockchain through the merger, the Ethereum blockchain still struggled with scalability, despite the robust security layer. Shibarium is also a PoS project, which will help Shiba Inu to scale while keeping it hooked on the Ethereum blockchain. Shibarium is expected to stabilize the value of SHIB and transform Shiba Inu into a value-adding project with long-term prospects.

Let’s see below how Shibarium will unlock the potential added to memecoin.

Better transaction speeds

By adding layer 2 to the Shiba Inu ecosystem, Shibarium will increase throughput, allowing the project to handle significant growth. Shibarium is expected to significantly increase transaction speed, although users will have to wait a little longer for accurate throughput information.

Lower fees

High transaction fees have been a problem for anyone conducting a transaction on Ethereum. Sometimes the fee is higher than the transaction amount. For example, one may have to pay a high fee of $50 worth of Ether (ETH) for a small transaction of $10 in value. The introduction of the Shibarium layer-2 solution is likely to make gas charges negligible.

Complete ecosystem

As opposed to being a pure memecoin, the Shibarium ecosystem will be extensive, encompassing multiple projects, including the SHIB metaverse, ShibaSwap DEX, and blockchain games. The metaverse and the games are expected to draw in users, while the DEX will provide better liquidity.

Token utility

The abundant supply of SHIB, despite the burning of more than 40% of the tokens, has been a major hindrance to its growth. Shibarium handles this by introducing BONE as the native coin. When Shibarium takes off, validators on the network will be paid in BONE to secure and validate transactions. Also, in the new ecosystem, every transaction will consume SHIB, a mechanism to control the hugely inflated supply of SHIB.

DApp development

DApps are decentralized applications with backend code that run on a decentralized peer-to-peer (P2P) network. However, the memecoin simply did not have the means to function as a native coin of DApps. Shibarium intends to develop a robust ecosystem consisting of a layer-2 solution in conjunction with Ethereum. It will provide the technical ability to create DApps in the ecosystem.

How will Shibarium work?

Shibarium will remove a large portion of transactions from the Ethereum blockchain, resulting in faster throughput without compromising security. The token burning mechanism will help keep inflation at bay.

The upcoming Shibarium will work by handling transactions while retaining the security layer of Ethereum. Since most network activities are handled by Shibarium itself, Ethereum will be relieved of the large volume of transactions that can flood it. This will result in faster but secure transactions.

Before adopting PoS, the low throughput of Ethereum resulted in network congestion and pushed up gas fees to an astronomical $50-$80 per transaction. The merger increased throughput to the network and reduced fees. Still, L2 solutions are required, as the base blockchain has to handle a stream of projects that slows it down.

In order to stem the inflation of the SHIB coin and set the prices in an upward movement, the Shibarium portal will have a mechanism to burn the SHIB tokens paid as fees to perform transactions. This will bring down the coins in circulation and stabilize the price of tokens.

Coin burning is a mechanism for sending tokens to one-way wallets that accept tokens but never release them. These coins are lost forever. Over time, the continuous burning of coins keeps inflation at bay in cryptocurrency projects.

Which coins will make up the Shibarium ecosystem?

The Shibarium ecosystem will have multiple coins with different roles.

The Shibarium will have a drastically different appearance compared to the Shiba Inu. However, the new ecosystem will have several digital tokens, all named in keeping with the dog theme:

• SHIB: An ERC-20 token that fuels Shiba Inu, SHIB has been around since August 2020. The price has always fluctuated and never crossed the $1 mark per token.
• BONE: A governance token on ShibaSwap, BONE is now also a utility token in Shibarium. Developers are paid in BONE. The token’s supply is limited to 230 million coins.
• LEASH: With supply limited to 107,646 tokens, LEASH is staked by holders to earn rewards. The rewards include xLEASH tokens that users can create after withdrawal.
• TREAT: Designed as a reward token, TREAT will be paid out to validators and developers along with BONE after reaching a certain threshold. It will also stimulate liquidity pools on ShibaSwap.
• SHI: The Shibarium ecosystem will also have the SHI stablecoin. The purpose of SHI is to counteract and balance payments and at the same time prevent market fluctuations.

Related: How and why do stablecoins depeg?

What is the role of the SHIB metaverse and ShibaSwap in the Shibarium ecosystem?

Metaverse and DEX in the upcoming Shibarium ecosystem will have multiple use cases that will give users a reason to jump on the network.

The SHIB metaverse is an immersive, virtual 3D space, with 11 hubs, each with different functions. The Alpha Preview version of the metaverse was shown at SXSW 2023 from March 13-15, presenting a glimpse of the WAGMI Hub, the first of these hubs, focusing on health and wellness.

In the metaverse hubs, users can take advantage of a variety of use cases, such as building digital businesses, bringing in real-world businesses, developing commercial and residential structures, playing innovative games, and even decentralized finance (DeFi) platforms. The metaverse will have a total of 100,595 plots that will be unlocked over time.

To participate in the bidding and buying process for land, users can use the MetaMask wallet. Bids and purchases must be made with ETH. Users will find a virtual place in the hubs to explore, discover, shop, sell and buy goods. The team hopes to offer the community, dubbed ShibArmy, a dynamic world that rewards their participation.

A hard fork of SushiSwap DEX, ShibaSwap enables users to perform a variety of functions. They can provide liquidity to earn BONE, receive nonfungible token (NFT) drops, bury (stake) tokens to earn returns, exchange tokens, vote their favorite cryptocurrency pairs to receive BONE and farm tokens.