Shiba Inu, the infamous ‘memecoin,’ underwent a crucial update unveiling its Shibarium layer 2 solution to improve scalability and accessibility for SHIB users. Despite this, the price failed to reciprocate the positive news.
Shiba Inu (SHIB) is a popular meme coin that quickly climbed the ranks during the 2020-2021 bull market. However, since the market downturn, SHIB has been subject to much fear, uncertainty, and doubt (FUD). FUD can come from various sources, including competitors, critics, and media outlets, and can lead to price stagnation.
In addition to FUD, several other factors can contribute to price stagnation, including a lack of adoption, utility, and investor confidence. While SHIB has gained popularity and a substantial community following, it is still considered a relatively new and speculative cryptocurrency, making it more vulnerable to price stagnation and volatility. But can this change following the latest buzz around SHIB’s layer 2 (L2) implementation?
A layer 2 scaling solution is a term used in blockchain technology to describe a second-layer protocol that sits on top of an existing blockchain network and aims to improve its scalability and transaction throughput. L2 solutions are designed to reduce the congestion and high fees associated with using a blockchain network like Ethereum. Some examples of L2 solutions include sidechains, state channels, and rollups.
Understanding the Shiba Inu Ecosystem
Shiba Inu (SHIB) is a cryptocurrency created in August 2020 as an ERC-20 token on the Ethereum blockchain. Created as a decentralized community-driven project to build a fun and friendly cryptocurrency rivaling Dogecoin (DOGE). Shiba Inu has gained popularity and a strong community of supporters, especially those interested in meme-inspired cryptocurrencies.
Shibarium is a layer-2 blockchain solution for the Shiba Inu ecosystem, which aims to provide faster and cheaper transactions for SHIB holders. The launch of Shibarium’s testnet was announced in late 2021, but it faced some technical issues and delays, causing uncertainty among the SHIB community. Since then, the developers of Shibarium have been working to address these issues and improve the platform and have provided regular updates to the community about the progress of Shibarium.
The latest update included updated documentation and a new chain ID for the ‘Puppy Net’ testnet.
Latest Advancements
Shibarium’s testnet is running again, according to Shiba project lead Shytoshi Kusama. The core developer shared the finished document with its community members on their communication platform.
The document gives insights into various features, including how the Shibarium proof of stake mechanism and the Ethereum Shibarium Bridge relate.
While Shibarium’s proof of stake (PoS) chain uses side chains to process transactions, the bridge enables a bidirectional transaction environment between Shibarium and Ethereum. Cross-chain bridges are essential for interoperability between different blockchain networks, and it’s necessary to ensure that the bridge is secure and reliable to prevent any fraudulent or malicious activities.
Plasma is a Layer 2 scaling solution for Ethereum that allows for fast and low-cost transactions by batching multiple transactions into a single transaction on the main Ethereum blockchain. PoS, on the other hand, is a consensus algorithm used in blockchain networks that allows for more efficient and secure transaction validation than traditional proof of work (PoW) consensus.
Increasing Scalability and Other Features
Using Plasma and PoS, Shibarium’s cross-chain bridge can provide fast and secure transactions between Shibarium and Ethereum without relying on a central authority. This trustless transaction environment ensures users can transfer their assets between the two networks without intermediaries or third-party risks.
In addition, Shibarium also introduced a new wallet feature for SHIB holders in collaboration with the Unification Foundation.
The new wallet for the Shibarium PoS chain offered users a range of features. One of the main benefits of the wallet is its seamless asset transfer and storage capabilities, which allow users to send and receive SHIB tokens quickly at a meager cost – allegedly 10,000 times less than the transaction cost on Ethereum.
Additionally, the wallet offers a user-friendly interface and a range of security features to protect users’ funds. Other wallet features include the ability to stake SHIB tokens and earn rewards. It also includes access to a decentralized exchange (DEX) for trading SHIB and other cryptocurrencies. The wallet also supports other Ethereum-based tokens, making it a versatile tool for managing various digital assets.
Overall, the developers aim to achieve some crucial advantages with the advent of Shibarium. Key attributes include security, transparency, efficiency, cost-effectiveness, and decentralization.
Shiba Inu Burning Mechanism
The Shiba Inu protocol uses a transaction fee system with a burn mechanism. Users pay a fee split into two parts whenever they make a transaction. The base fee, which makes up 70% of the total, is then burned and removed from circulation. This helps to reduce the total supply of SHIB tokens over time and increase their scarcity.
The remaining 30% fee is paid to the transaction’s validator. This incentivizes validators to process transactions quickly and efficiently, as they receive a portion of the cost. Speaking to BeInCrypto, Shytoshi Kusama, a core developer behind Shibarium, stated:
“Once a certain amount of BONE ($25,000) is accumulated in the burn contract, users can start the burn process from Shibarium. Once this process starts, accumulated BONE is sent to Ethereum’s L1, where an automated swap for SHIB takes place, and this amount gets burned, calling its contract function. It is comparable to a withdrawal transaction, but instead of receiving tokens, they are burned and taken out of the total supply.”
Community Reactions
SHIB holders have welcomed the latest development with open arms, taking to social media platforms to share their opinions.
Dominant investors also join the SHIB shopping spree:
Despite these bullish developments, SHIB’s price remains consolidated around the $0.000010 mark. Over 70% of SHIB holders are currently at a loss or only breaking even.
This follows a uniform trend wherein an asset’s price remains stagnant regardless of improvements in the underlying technology.
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