Shiba Inu: Much More than a Dogecoin Killer
October 19, 2021
You’ve come to the right place if you’re curious about Shiba Inu and how it works. The creator of this cryptocurrency, Ryoshi, has always described the Shiba project as a decentralisation experiment, aiming to prove that a cryptocurrency can emerge and grow from any online community, even with a zero budget. But what constitutes explicitly the vast ecosystem of Shiba Inu, and how does it operate?
What Is Shiba Inu?
Shiba Inu (SHIB) is a cryptocurrency and a DeFi protocol built on Ethereum. Launched in August 2020, it quickly gained popularity through the viral meme effect, boosted by tweets from Elon Musk and a particularly bullish period for Bitcoin, Dogecoin, and NFTs. The resulting community, known as the “ShibArmy,” presents with a Woofpaper instead of a Whitepaper, filled with “canine” slang mixed with quotes from the Japanese philosopher Miyamoto Musashi.
Shiba’s tokenomics is unique. A quadrillion SHIB tokens were created and distributed as follows:
- Half were sent to Ethereum founder Vitalik Buterin‘s wallet.
- The other half were placed in the UniSwap ETH-SHIB liquidity pool.
Why Vitalik? This allocation of SHIB was entrusted to Ethereum’s founder with the hope that he wouldn’t sell them. According to the Woofpaper, “There is no magnificence without a vulnerability point.” However, when Shiba Inu’s price began to soar shortly after its launch, Vitalik donated $1 billion worth of SHIB to a Covid relief fund in India. Subsequently, Vitalik “burned” another 410 trillion SHIB and announced his intention to donate 10% of his original share, not wanting to bear such responsibility over the token. These actions did not harm Shiba Inu’s value; the first action improved the cryptocurrency’s reputation, and the second helped maintain its scarcity. Remember, the other half of the total supply remained available for purchase on UniSwap.
The 3 Tokens of the Ecosystem
To fully understand what Shiba Inu is, you should know that the project didn’t stop with the SHIB token but used the ERC-20 standard to create several utility tokens.
Shiba Inu (SHIB) is the first and primary token of the ecosystem, with tokenomics designed to compete in the market like any other cryptocurrency. This sets it apart from the other two tokens.
Doge Killer (LEASH) was created to challenge Dogecoin. LEASH’s price was initially pegged to DOGE’s via a mechanism similar to algorithmic stablecoins, adjusting its supply to maintain the peg.
Unencumbered by the price of DOGE, LEASH remains relatively stable, having a very low supply of 107,647 units and being usable only within the Shiba Inu ecosystem.
Bone ShibaSwap (BONE) is the governance token and the basis for Shibarium, Shiba Inu’s Ethereum Layer 2 solution. It’s used to participate in governance proposals and vote on protocol changes and is needed to pay network gas fees, thus facilitating transactions. Its maximum supply is 250 million.
The Shiba Inu Ecosystem
As you might have guessed, this ecosystem is diverse, so let’s delve into the details to answer the question: What is Shiba Inu, and how does it work?This ecosystem includes the decentralised exchange (DEX) ShibaSwap and Shibarium, Ethereum’s Layer 2. ShibaSwap, a fork of SushiSwap, was launched with a “Liquidity Event” during its first two weeks in July 2020.
It stands for Decentralised Exchange and is a cryptocurrency exchange platform that is not controlled by any intermediary or company, but is completely reliant on smart contracts and algorithms. DEXs also often require more technical skills and in-depth knowledge of cryptocurrencies. They do not support fiat currencies and do not allow withdrawal and deposit via traditional payment systems.
A decentralised exchange is a cryptocurrency trading platform not controlled by any intermediary or company and is entirely reliant on smart contracts and algorithms. DEXs often require more technical skills and a deep understanding of cryptocurrencies than CEXs. They don’t support fiat currencies or allow withdrawals or deposits through traditional payment systems.
By transferring liquidity from UniSwap or SushiSwap or by providing it directly on ShibaSwap, participants were rewarded with BONE tokens at a high percentage that gradually decreased over the two weeks.
ShibaSwap, beyond token trading like any DEX, currently mainly offers staking and liquidity provision functionalities.
- Dig: Provide liquidity to liquidity pools to receive ShibaSwap liquidity pool tokens (SSLP).
- Woof: Redeem rewards from liquidity pools by converting SSLP into BONE.
- Bury: Stake SHIB, LEASH, and BONE to receive rewards in xSHIB, xLEASH, and xBONE. Once removed from staking, these representative tokens can be redeemed to their underlying tokens.
- Bonefolio: A feature for viewing all reward rates, platform data analysis, and monitoring your tokens and rewards.
This is the Ethereum Layer 2 launched by the Shiba Inu community, developed based on leading networks like Optimism and Arbitrum, aiming to make applications developed by the meme coin team faster and more scalable. Launched in August 2023, it quickly gained notable adoption, especially considering the challenging market phase. The dapps on this blockchain are currently around a dozen, and the total value locked (TVL) is nearly one million dollars.
Understanding Shiba also involves grasping how the project is managed internally. Building a DeFi project with a governance structure is attainable as the community grows. The developers have envisioned creating a DAO, or decentralised autonomous organisation, governed exclusively through smart contracts, enabling the full potential of the BONE token and giving the community a scalable and democratic voice. Currently, the project’s development and emergency move wallets are multisig, meaning they can only be used with the signature of a minimum number of custodians. All custodians are trusted, and their tags and addresses are listed in the Woofpaper.
Given the ecosystem’s continual canine references, it was predictable that the development team would also focus on something playful. Thus, in October 2022, Shiba Eternity, a free-to-play collectable card game, was launched.
NFTs and the Metaverse
Lastly, to complete the overview and assert a comprehensive understanding of Shiba Inu and its workings, one cannot overlook two community initiatives that have somewhat receded into the background:
- SHIBOSIS: A collection of 10,000 NFTs granting access to an exclusive club and direct communication with the ecosystem’s team members.
- SHIB, The Metaverse: A world of 100,000 virtual land plots where you can build your domain while generating revenue.
The Spirit of Shiba Inu
The project does not abandon its love for four-legged creatures as it grows. Amazon Smile allows some of its online expenses to support SIRA, an association that protects Shiba Inu. Another collateral project is the Shiba Incubator, which promotes talent within the community and supports the principle that greatness can emerge from nothing by simply helping one another.