SHIB, short for Shiba Inu, is a cryptocurrency token inspired by the Dogecoin meme. It was created anonymously in August 2020 under the pseudonym “Ryoshi.” SHIB has grown to become one of the top 20 cryptocurrencies by market capitalization, driven in part by strategic token burns intended to reduce the circulating supply and potentially increase the price.
What is SHIB?
SHIB is an Ethereum-based ERC-20 token, meaning it runs on the Ethereum blockchain and follows a specific set of standards. At launch, 1 quadrillion SHIB tokens were minted, 50% of which were locked permanently to Ethereum co-founder Vitalik Buterin’s wallet to remove them from circulation. Another 50% were put into Uniswap, a decentralized token exchange.
Like other meme coins, SHIB was created to be abundant by design, with a massive initial supply intended to make each token extremely inexpensive. This allows users to own large numbers of tokens for a modest investment. Despite the huge supply, proponents argue SHIB can still gain value through token burns.
How does SHIB burning work?
Burning SHIB tokens permanently removes them from circulation. This reduces the total supply and, in theory, increases the scarcity and value of the remaining tokens. There are a few ways SHIB gets burned:
- Projects burning tokens – Some projects supporting the SHIB ecosystem burn large numbers of SHIB as a promotional activity. For example, the music streaming service Bigger Entertainment has burned over 200 million SHIB to date.
- Sending to dead wallet – People can burn SHIB by sending it to an irretrievable “dead wallet,” removing the tokens from circulation.
- Transaction fees – On the ShibaSwap decentralized exchange, a portion of transaction fees are burned.
- NFT purchases – The developers burn SHIB when people buy certain SHIB-themed NFTs.
How many SHIB have been burned so far?
As of November 2022, approximately 410 trillion SHIB tokens have been burned, reducing the circulating supply to about 589 trillion tokens. This represents around 41% of the original minted supply. Here is a breakdown of major SHIB burning milestones so far:
| Date | Total SHIB Burned |
|---|---|
| May 2021 | 1 quadrillion |
| August 2021 | 100 trillion |
| November 2021 | 300 trillion |
| January 2022 | 350 trillion |
| April 2022 | 395 trillion |
| November 2022 | 410 trillion |
The largest single burn event occurred in May 2021, when Vitalik Buterin burned nearly half the initial supply by donating trillions of SHIB tokens to a coronavirus relief fund in India. This removed the tokens from circulation and kickstarted the SHIB burn process.
What is needed to burn the remaining supply?
To put a major dent in the 589 trillion SHIB still circulating, burns would need to ramp up significantly. Here are some hypothetical scenarios and the impact they could have:
- Burning 1 trillion per month would take 49 years to burn the remainder of the supply.
- Burning 10 trillion per month would take 4.9 years to burn the remainder of the supply.
- Burning 100 trillion per month would take less than 6 months to burn the remainder of the supply.
Based on historical burns of a few hundred billion per month, burns would need to increase exponentially to make a real dent and get close to burning the full initial supply any time soon. For context, at current average burn rates, it would take approximately 150 years to burn through the remaining supply.
Challenges to increasing burn rate
Significantly increasing SHIB’s burn rate faces some challenges:
- Dependent on donations and community participation – The main burn methods rely on voluntary token burning.
- Transaction fees limited – Fees on ShibaSwap make up a small portion of total burns.
- Large individual burns unlikely – Another massive burn like Vitalik Buterin’s is improbable.
- Requires major ecosystem growth – More platforms and users are needed to increase burn opportunities.
Does burning tokens impact price?
In theory, burning tokens reduces the circulating supply which should increase the value of the remaining tokens. However, supply is only one factor impacting price. Other key factors include:
- Market capitalization – This measures the total value of all tokens in circulation. Reducing supply doesn’t necessarily grow the market cap.
- Demand – If demand stays the same while supply reduces, price should increase.
- Utility – The token needs real-world utility and adoption driving demand.
- Speculation – Hype and speculation tend to drive major price movements.
While burning introduces some deflationary pressure, other factors like hype and speculation likely play a bigger role in determining SHIB’s volatile price swings.
SHIB price history
| Date | SHIB Burned | SHIB Price |
|---|---|---|
| January 2021 | 0 | $0.000000000073 |
| May 2021 | 1 quadrillion | $0.000012 |
| October 2021 | 366 trillion | $0.000055 |
| April 2022 | 395 trillion | $0.000013 |
| November 2022 | 410 trillion | $0.000009 |
Despite significant burns in 2021, SHIB’s price peaked in October 2021 based mainly on speculative interest before declining again. This shows that burns have a limited influence on price compared to hype and overall crypto market conditions.
The future of SHIB burns
The SHIB community remains committed to ongoing burn efforts through initiatives like playlists on streaming services, NFT sales, and encouraging transfers to dead wallets. However, the rate of burns would need to scale exponentially to make a dent in the remaining supply any time soon.
While future price increases could motivate more people to burn their SHIB, it seems unlikely the full initial supply will be burned in the foreseeable future. Ongoing burns represent just one part of the overall effort to build SHIB’s ecosystem and increase adoption.
Significant SHIB burns will likely continue intermittently, lowering the total supply gradually over many years. But for major price increases, SHIB likely needs to focus on utility, use cases and enthusiasm around the broader project.
Conclusion
SHIB has made significant progress burning over 410 trillion tokens so far. However, with over 589 trillion still in circulation, exponentially larger burns would be needed to get close to burning the full initial supply in the near future.
While additional burns can introduce some deflationary pressure, other factors like hype, speculation and real-world usage ultimately drive SHIB’s price. For long-term growth, SHIB needs to focus on building utility, community and use cases beyond just burning tokens.
Ongoing burns will likely remain part of the SHIB ecosystem. But rather than the main value driver, they represent one component of the broader growth strategy as SHIB works to establish itself as a leading meme coin and gain mainstream traction.