Topics Blockchain
Bybit Learn
Bybit Learn
Beginner
Sep 5, 2022

Shibarium: The Upcoming Layer 2 Blockchain Solution for SHIB

Crypto enthusiasts can never rest; it sometimes seems like new coins, blockchain solutions and similar developments arise hourly. By now, many crypto lovers have heard a lot about a mysterious blockchain solution called Shibarium.

Though Shiba Inu's developers haven't released all the facts about Shibarium quite yet, they've shared more over the past few weeks — and the trickle of information is turning into a faucet. Soon, it will soon become a firehouse. Read on to find out what we know about Shibarium, what we don't and what we'll learn soon.

What Is Shibarium?

Shibarium is a Layer 2 blockchain scaling solution—a secondary framework added on top of another blockchain to improve scalability and increase transaction speed—aimed at enhancing the workings of Shiba Inu’s host chain, Ethereum.

Why Is Shibarium Being Launched?

The primary purpose of Shibarium is to optimize Ethereum, Shiba Inu’s host chain, by increasing scalability. That's not all, though.

Prior to his departure from the crypto space, Shiba Inu's creator Ryoshi mentioned in a now-deleted blog post that he hoped for the blockchain solution to do the following:

  • Speed up transactions by allowing more to occur simultaneously

  • Lower transaction fees and, in some cases, eliminate them for those in the Shiba ecosystem

  • Make Shiba Inu NFT gaming easier by facilitating rapid transactions

  • Contribute to Shiba Inu metaverse implementation and applications

  • Work as a foundation for decentralized app (DApp) development and other projects

Ryoshi also wanted the Shibarium blockchain to help change the common perception that Shiba Inu is just a meme coin, convincing people to see it as a valuable asset.

Shibarium could even result in the Shiba Inu (SHIB) price rising. That would be a welcome development to some, now that Shiba Inu's value has dropped 88% from its highest price in the current bear market.

How Will Shibarium Work?

Transactions will be divided between the Layer 1 chain (Ethereum) and Layer 2 protocol (Shibarium). That may sound like it would slow things down, but the opposite is true: Shibarium will handle a large portion of the load, preventing Ethereum transactions from overwhelming the system. The result will be a drop in network congestion.

Shibarium has a built-in mechanism which allows coin holders to burn tokens, removing them from circulation and boosting the coin's price. It’s reported that Shibarium may charge a nominal transaction fee and use that fee to burn SHIB tokens. This would allow Shibarium to continually burn tokens and drive up the value of SHIB exponentially and sustainably.

For the uninitiated, blockchains have set amounts of tokens, so limiting them makes those that are left over more valuable. Burning works by sending tokens to wallets that accept but never release them, removing access to them forever.

Holders who burn their tokens are likely to be rewarded with lower transaction fees. 

Benefits of Shibarium

The Shibarium blockchain will provide countless benefits. Here are just a few:

  • Cost-effectiveness—Shibarium gas fees will be unusually low, and users will have options to lower them further.

  • Security—As a decentralized system, Shibarium is an ultra-secure option for sharing sensitive data without vulnerability to tampering.

  • Transparency—Users will be able to see and keep track of transactions.

  • Efficiency—Shibarium will process transactions at high speeds.

Among all cryptocurrencies, Ethereum is known to have abnormally high gas fees. Shiba Inu users feel the pinch, and only a Layer 2 solution can solve the issue, since SHIB relies on the Ethereum blockchain.

Increased efficiency will produce the sort of rapid, low-cost transactions necessary for gaming. Moreover, Shibarium's efficiency as a scaling solution could make the SHIB ecosystem more appealing to large companies that must complete countless daily transactions.

When Will Shibarium Be Launched?

Developers have already conducted a private Shibarium launch as part of the alpha testnet phase, stating that the private launch went well. A wallet tool is the primary feature under development to get Shibarium ready for a full launch.

The Layer 2 solution has also passed through a public testnet phase, which developers deemed a success.

Investors — and hopeful potential investors — have been eager to learn the final launch date, when Shibarium will be available on the Ethereum mainnet. Developers spent months saying it was imminent, but they were unable to give a precise date because of difficulties in ascertaining how long development might take.

Although the official release date is still unknown, a clearer image is starting to form: Shytoshi Kusama, Shibarium's principal developer, has indicated the launch will be “soon” in a tweet to Twitter user @Hekadabighomie. Likewise, Unification Foundation, the company developing Shibarium, has also stated that the Shibarium public beta would be available in Q3 2022, which means that the launch is likely to occur before September 30.

How Will Shibarium Impact SHIB?

Only Shiba Inu will benefit from Shibarium. Currently, many people think of Shiba Inu as a meme coin—a cryptocurrency that functions as a meme, inspiring many to engage with it before they eventually lose interest.

Meme coins are generally considered a "pump-and-dump" option that holders purchase solely to wait until their value increases, in order to sell them for profit.

Since Shibarium will help stabilize and even raise the price of Shiba Inu through its burn mechanism, it will help to reduce the token's meme status. History shows this is possible: Critics have often flung "meme coin" accusations at cryptocurrencies that later proved to be serious investments, such as Floki Inu.

Lower transaction fees could also benefit the values of tokens within the Shiba Inu ecosystem by encouraging more transactions (in general) and enticing new crypto traders.

Shibarium Utility Token

The Shiba Inu ecosystem involves more than just one type of token. It also includes LEASH and BONE tokens. Notably, developers have chosen BONE as Shibarium's utility token — the asset developers use to raise funds for new cryptocurrency projects.

Each type of token in the ecosystem provides different ways for holders to increase their return on investment. Holders can use ShibaSwap, Shiba Inu's native decentralized exchange (DEX), to trade tokens, participate in governance, earn rewards and purchase NFTs.

SHIB

Though BONE is Shibarium's chosen utility token, SHIB is the native token within the Shiba Inu ecosystem. Unlike any cryptocurrencies before, SHIB allows users to hold trillions of tokens simultaneously.

The supply is capped at 1 quadrillion — or 1,000 trillion — so it's not going to run out any time soon.

SHIB arrived on the scene in August 2020 and was marketed as a rival to Dogecoin. Though its value has fluctuated, token prices have never come close to even one U.S. penny. However, that means Shibarium's influence could create exponential gains for investors.

LEASH

LEASH, sometimes referred to as Doge Killer, is well-named. Just as an actual leash limits the pup at the end of it, this token limits liquidity with a cap of 107,646 tokens. Initially released as a rebase token — a token meant to stabilize other tokens within an ecosystem — the developers ultimately abandoned that purpose and decided to put LEASH to other uses. What LEASH lacks in liquidity, it makes up for with other benefits. Liquidity holders can stake (or “bury”) LEASH tokens, placing them in an asset pool for earning rewards. That increases the overall value of the pool. Rewards include xLEASH tokens, which you can trade for SHIB after unstaking.

BONE

BONE is ShibaSwap's governance token, meaning its owners get to vote on ideas and proposed plans for the Shiba Inu ecosystem. Capped at 230,000,000 tokens, it's so well-regarded within the ecosystem that developers receive their pay in BONE.

And now it's also Shibarium's utility token—but why is the BONE token the best choice? There are a few reasons. Among these is that its cap is high enough to allow users to purchase large amounts while sustaining liquidity, but low enough to keep BONE from needing intense management to keep the price afloat.

While LEASH's value has shot into the thousands of dollars in the past, and SHIB's has never even reached 1 cent, BONE floats somewhere in between. Its circulating supply is more limited than SHIB’s, but significantly less limited than that of LEASH.

Its status as the governance token of the ecosystem makes it a perfect utility token, too. In one sense, utility tokens are for fundraising, so it's natural that purchasers would also want a say in how the ecosystem goes.

Ryoshi suggested in a blog post that BONE will be a clear "0" starting point as the Layer 2 solution's utility token as they would not have to worry about overarching “whale bags.”.

The Future of Shibarium

If Shibarium achieves its goals, it will have a monumental effect on the Shiba Inu ecosystem. Token values will stabilize — and even rise — and transactions will be faster and cheaper. Furthermore, it will create a more decentralized exchange to provide increased liquidity.

It's impossible to guess the specifics of what will come from the ecosystem-related apps and services that develop with Shibarium as their foundation. Developers will be able to implement novel uses of the blockchain's technology. However, there's little doubt that such apps will make the ecosystem more robust.

Facilitating more efficiency for metaverse applications is one of the most intriguing possibilities for the scaling solution, one that could turn Shibarium into a force to be reckoned with.

Closing Thoughts

Though many see Shiba Inu as a meme coin, it has already grown beyond its initial reputation. It's now spread to become an entire ecosystem, with tokens like LEASH and BONE serving purposes SHIB couldn't have handled alone.

Shibarium provides a chance to leverage and grow the ecosystem by offering faster transactions, increased security and more. Developers have put their all into making sure this eagerly anticipated blockchain solution hits the ground running.