We all know how cute Shiba Inus are, but did anyone foresee this cuteness garnering a $35b market cap? Long an agile, friendly-looking Japanese hunting dog with a teddy bear nose, Shiba Inus have recently lent their name to something else – the latest crypto craze. While they may share the same mascot, we’re not talking about Dogecoin (DOGE). We’re talking about the Shiba Inu coin (SHIB), which briefly became the ninth largest cryptocurrency by market cap after a spectacular rally last October.
Shiba Inu is a reminder of the power that memes have in the world of cryptocurrencies. For those willing to take the risk, fortunes can be made overnight. But in the world of crypto, things tend to fall as quickly as they rise, so life savings can disappear in the same short time period.
Shiba Inu is also a reminder that the crypto market’s appetite for “altcoins” (cryptocurrencies other than Bitcoin) is alive and well. While some of these altcoins are self-admitted get rich quick schemes, others claim to have legitimate applications and utility. Earlier this year, we ran a three-part crypto series on Bitcoin (BTC), Ethereum (ETH), and Dogecoin. Today, we’ll be kicking off another three-part crypto series to explore some lesser-known altcoins.
History of the Shiba Inu coin
In August of 2020, a mysterious internet character named Ryoshi launched the Shiba Inu coin using the Ethereum blockchain. As with so many other cryptocurrencies, the coin was introduced to the world through an online white paper. Crypto white papers can be thought of as manifestos of sorts; a way for creators to paint an overarching vision for their coin and outline how it offers a solution to certain problems and issues.
Shiba Inu’s introduction was made through the infamous 28-page “Woof Paper.” In its introduction, the Woof Paper poses a simple question: what would happen if a cryptocurrency project was 100% run by its community? The paper continues to harp on this theme of community, referencing a quote from Ryoshi that calls the Shiba Inu project “an experiment in decentralized spontaneous community building.” Calling themselves the “SHIB Army”, the Woof Paper spells out the community’s three founding principles…
We started from zero, with zero. It’s the spirit of our project to create something out of nothing. We were not founded from an existing community, let alone a preassembled team. We love Shiba Inu dogs.
That’s right, the SHIB Army’s love of Shiba Inu dogs is real. The Woof Paper encourages SHIB Army recruits to donate a portion of their Amazon purchases to the Shiba Inu Rescue Association through an Amazon Smile link.
Shiba Inu’s tokenomics
Besides the democratic and decentralized rah-rah community building, the Woof Paper does a good job of explaining the structure of Shiba Inu’s ecosystem, or (as it’s called in the crypto world) “tokenomics”.
The Shiba Inu ecosystem is divided into three separate tokens. When the project was launched, Ryoshi minted 1 quadrillion Shiba Inu coins, which are the flagship tokens. Ryoshi then locked half of these up in a Uniswap wallet as a liquidity pool and “threw away the keys.” The remaining half was given to Ethereum co-founder Vitalik Buterin.
Rather than “rug pull” (ie cash in), Buterin “burned” 90% of his holding, sending more than 410 trillion Shiba Inu tokens worth $6.7b to a dead blockchain address and effectively removing them from circulation. Buterin then donated the remaining 10% of his SHIB tokens (worth about $1.2b at the time) to an Indian Covid-19 relief fund.
The second token in the Shiba Inu ecosystem is LEASH. The LEASH tokens were originally rebase tokens tied to the price of Dogecoin, but Ryoshi later decided to turn off their rebase function. The price of LEASH tokens now moves independently based off its supply and demand. Unlike the SHIB tokens, LEASH has a relatively scarce supply of only 107,647.
The third token in the Shiba Inu ecosystem is BONE. BONE is a governance token that allows its holders to vote on proposals and its supply is in between SHIB and LEASH at 250,000,000.
Earlier this fall, the Shiba Inu coin rose from crypto obscurity to become one of the top ten most valuable tokens on the market. The project accomplished exactly what Ryoshi had set out to do – create something out of nothing. So, what was the catalyst for Shiba Inu’s rally? Despite Shiba Inu’s founders promoting their coin as a “Dogecoin killer”, similarities between SHIB and DOGE can’t be ignored. Perhaps those same crypto investors who made Dogecoin one of the most valuable tokens on the market chose Shiba Inu as their next target.
Dogecoin investor Elon Musk tweeting a picture of his Shiba Inu puppy only threw fuel on the fire. However, Musk has since laid speculation over where his crypto loyalties lie to rest, tweeting earlier in November that he doesn’t own any SHIB. Another catalyst was Shiba Inu coin getting listed on the Coinbase (COIN) exchange. The listing made SHIB that much more accessible and flooded the SHIB Army with new recruits.
Shiba Inu investors are now eagerly awaiting to see whether Robinhood (HOOD) will follow Coinbase’s decision to list the coin. In fact, more than 350,000 people have already signed a petition asking Robinhood to allow trading of Shiba Inu on their platform. Robinhood is notoriously picky about which cryptos it allows on its platform, so while a decision to list SHIB is unlikely, it would certainly be the next catalyst the meme coin needs to continue its ascent.
why it matters
Is Shiba Inu here to stay or is it simply the current flavor of the week? Unlike more traditional coins such as Bitcoin and Ethereum, Shiba Inu doesn’t have a strong case for its real-world utility. It’s hard to claim SHIB is anything more than a meme, though some of its “hodlers” point to the fact that its ecosystem (the Ethereum blockchain) allows for smart contracts, NFTs, and liquidity mining.
With only 137 merchants currently accepting SHIB as payment, it’s hard to see Shiba Inu becoming the world’s next medium of exchange. And with the average crypto enthusiast only holding SHIB for 11 days, it’s hard to see the meme coin being treated as a serious long-term investment. However, the world of crypto has taught us to expect the unexpected, so only time will tell what’s to become of the Japanese hunting dog-inspired meme token.