Why Burn SHIB Tokens?
Shiba Inu (SHIB), the meme-themed digital coin, has recently received much attention. This is primarily due to the network’s intentional destruction of many SHIB tokens.
The rate at which Shiba Inu tokens are being burned has spiked dramatically, sometimes by 500% in a single day. Many crypto enthusiasts are captivated by this method, which aims to keep the value of the meme token stable by limiting supply.
In August 2020, the Shiba Inu ecosystem debuted with a massive supply of one quadrillion SHIB tokens. Due to the rapid popularity of the memecoin, the Shiba Inu community and developers believe that explaining the intricacies and mechanisms of the asset’s burn process has become increasingly vital.
This guide will discuss all you need to know about the complex procedures involved in Shiba Inu coin burning and what to expect.
Crypto Token Burning Explained
In the crypto industry, burning is a process through which certain coins or tokens are permanently removed from the circulating supply. The process involves moving the assets to a burn address where they can never be retrieved or used.
Thus, there is a significant reduction in the token supply in circulation. Furthermore, the burn address is a crypto wallet having no known private keys, and not controlled by any entity and is inaccessible to any individual.
How Is SHIB Burn Done?
The burning mechanism for the Shiba Inu network is known as the SHIB Burn, which is the process involved in the burning of SHIB tokens. In the Shiba Inu ecosystem, the burn process is achieved manually but with an automated mechanism incorporated into Shiba Inu’s native blockchain, the Shibarium network.
However, the two burning processes are distinct; the manual burn removes coins from circulation by moving them to a burn address. On the other hand, the automatic burn mechanism, commonly known as implicit burning, is determined by the network’s transaction activities.
This type of burn involves using a percentage of the transaction fee for every SHIB transaction to burn the tokens. Thus, for every transaction involving SHIB, the total supply of the asset will gradually decline, creating a fundamental burn rate that continues so long as there are steady activities on the network.
Moreover, the Shiba Inu network uses three addresses to burn SHIB tokens. Furthermore, the wallets are not built by the Shiba Inu team but are developed on the Ethereum platform and utilized by other tokens.
Shiba Inu Burn Rate Explained
The burn rate for this memecoin defines how many tokens are removed from circulation in a given period. Thus, the higher this rate, the more assets are withdrawn. Similarly, the lower the rate, the fewer tokens are destroyed.
Due to the importance of the burn rate, investors and traders are known to keep an eye on it as it can influence the token’s price action.
The SHIB Burn Tracker
One critical aspect of the SHIB burn process is that it can be easily tracked via the Ethereum network. Furthermore, the SHIB burn trackers Shiba Burn Tracker and Shibburn are sites that provide up-to-date transaction records involving Shiba Inu.
These sites contain details about the addresses involved, the timestamp and the amount of tokens burned.
Does Burn Boost SHIB’s Value?
Several factors come into play when assessing the significance of the burn processes in terms of value addition to this memecoin.
Interplay Between Supply and Demand: This is the main trigger of a token’s value after a burning activity. A spike in the demand for SHIB and a shrinking supply due to burning can increase a token’s appeal and price.
Steady Purchase Rate: The burning of massive amounts of tokens over a short period is unlikely to impact the price when large-volume transactions occur significantly. This scenario is not just about the burning activities; it is about maintaining a balance in line with the existing purchase rate of the asset.
Adoption and Liquidity: The liquidity level and adoption of an asset within a market are crucial to the token’s viability. In addition, substantial token burning can fail to raise the token’s value if it lacks ample liquidity and adoption.
Burning SHIB may become a variable in the upward movement in the value of any token. However, it is far from being the sole solution. Even though burning can elevate the value of a token, it needs to be part of the broad strategy to achieve sustained growth.