Shiba Inu Token Burn: What Is It and How Does It Work?

Bittime - Shiba Inu (SHIB), originally known as a meme-based cryptocurrency, has recently attracted great attention in the crypto world, especially thanks to a significant spike in the number of SHIB tokens being burned. The SHIB burning process experienced an extraordinary spike, even up to 500% in a day, which made many investors and crypto fans even more curious. 

Since launching in August 2020 with an initial supply of one quadrillion tokens, Shiba Inu has now burned more than 41% of its total supply, according to data from SHIB burn tracker Shibburn.

What Is Crypto Token Burning?

Token burning is a process in which a certain number of tokens or coins are permanently removed from circulation. This is done by sending tokens to an address called a “burn address”, which no one can access or use. These burn addresses are wallets that do not have private keys, so tokens sent to them cannot be recovered.

Read also: Shiba Inu Token Price Prediction for 2025, Will SHIB Value Increase or Decrease?

Why Are Tokens Burned?

There are several reasons why crypto projects burn tokens, although this may seem to conflict with the goal of having more tokens on the market. Token burning aims to create scarcity, which can affect the price of the token. Some purposes for burning tokens include:

• Creating scarcity: By reducing the number of tokens in circulation, burning can increase scarcity, which can drive up the value of remaining tokens.

• Controlling inflation: Burning helps regulate inflation by reducing the ever-expanding supply of tokens.

• Increasing demand: Burning can decrease the supply of tokens, potentially increasing demand for remaining tokens.

How Does the SHIB Burning Process Work?

SHIB burning is done through two main ways: manual and automatic burning. Manual burning is done by sending tokens to the burning address. Meanwhile, automatic burning, which occurs on the Shiba Inu (Shibarium) network, leads to the burning of tokens every time there is a transaction on the network. In this case, a portion of the transaction fees is used to burn SHIB, which slowly reduces the token supply over time.

Why SHIB Burned?

With such a huge amount of SHIB circulating in the market, the main goal of burning SHIB is to create scarcity. When more tokens are burned, there are fewer in circulation, which can increase demand for SHIB, thereby pushing the price of the token up. Token burning also helps prevent excessive inflation that can arise if too many new tokens are minted or distributed.

Read also: Shiba Inu (SHIB) Developer Will Launch TREAT Token

Where Do Burned SHIB Tokens Go?

Burned SHIB tokens will be sent to a specific burn address. There are three main addresses used to burn SHIB, most of which are connected to the Ethereum network. One of these addresses is widely known for being used by Vitalik Buterin, co-founder of Ethereum, to burn $6.7 billion worth of SHIB in May 2021. Another burn address was used by the Shiba Inu team for the ShibaSwap listing, and the last one is known as Black Hole, which connected to the Ethereum genesis address.

What is SHIB Burn Rate?

SHIB burn rate is a measure of how quickly SHIB tokens are burned. The higher the burn rate, the more tokens are destroyed and removed from circulation. A high burn rate is often considered an indicator of strong community support, which can attract more investors. However, a sudden spike in the burn rate may also fuel speculation about SHIB's future performance.

What is SHIB Burn Tracker?

All SHIB burning transactions are recorded transparently on the Ethereum blockchain. Some SHIB burn tracking sites, such as Shibburn And Shiba Burn Tracker, provides real-time information about SHIB burning transactions. Shibburn provides data regarding SHIB supply, burn rate, number of tokens burned in the last 24 hours, and recent burn transactions. Meanwhile, Shiba Burn Tracker provides graphic visualization to show the SHIB burning trend in the last 30 days.

Does SHIB Burning Increase Value?

Token burning can potentially impact the price of SHIB, but this is not an immediate guarantee. Several other factors also play a role in determining prices, including:

• Supply and Demand: The interaction between supply and demand is the main factor in determining the price of a token. If demand increases and supply decreases due to burning, this could increase the price of SHIB.

• Continuous Purchase Rate: Burning a large number of tokens in a short period of time may not have much effect if there are much larger purchases or transfers each day. Effective burning requires balance with a continuous level of purchase.

• Liquidity and Adoption: Token burning alone may not be enough to drive the price if SHIB does not have sufficient liquidity or widespread adoption in the market.

• Long Term Perspective: SHIB burning has the potential to influence the price in the long term, but the success of this token will also depend heavily on the adoption and management strategies implemented by its developers.

Conclusion

While burning SHIB is not an instant solution to increase the value of the token, it is part of a long-term strategy to create scarcity and control supply. Burning can help increase the token's appeal, but long-term success will depend on wider adoption, supply stability, and other factors that influence market demand.

FAQ Token TREAT Shiba Inu

What are TREAT tokens? 

TREAT token is a new token launched by the Shiba Inu ecosystem. This token will play an important role in achieving full decentralization within the Shiba Inu ecosystem, as well as being used in various features such as yield farming, governance, and real-world transactions through SHIB Pay.

When will the TREAT token be launched? 

The official launch of the TREAT token is scheduled for January 2025. While an exact date has not been announced, Shiba Inu has confirmed that the token will be available that month.

What are the main benefits of the TREAT token for Shiba Inu users? 

The TREAT token will provide access to advanced features in the Shiba Inu ecosystem, including WOOF Wars (yield farming), a governance system, and integration with SHIB Pay for real-world transactions. This token is also an important step towards full decentralization in the Shiba Inu ecosystem.

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Reference

Coin Edition, SHIB Burn Explained: Everything to Know About Shiba Inu Coin Burning, accessed January 5, 2024.

Author: MF