While dogecoin got name-dropped on Saturday Night Live last weekend, another dog-themed cryptocurrency is making waves this week.
Like dogecoin, shiba inu tokens (SHIB) are themed around the shiba Inu breed of dog. They are also designed to be “fun tokens” that come with a “woofpaper” instead of a whitepaper. They have a total supply of one quadrillion tokens — compared with an unlimited total supply and a circulating supply of 129 billion of dogecoins — and each token is worth just a fraction of a cent.
Since the start of May, shiba inu tokens have shot up in value. According to CoinGecko, the tokens have gone from $0.0000015 to their current value of $0.00003 — a 1,900% rise. This was helped by recent listings on crypto exchanges OKEx, Huobi, FTX and Poloniex and an upcoming listing on crypto exchange Binance.
This growth has put some early token holders into the money. One account purchased 200 billion tokens for just $17 in October 2020. Those tokens are now worth $6.5 million on paper, if you multiple by the number of tokens by the price. But, with current liquidity, they could actually be cashed out through decentralized exchange Uniswap for $5.9 million.
Another big token holder is Ethereum co-founder Vitalik Buterin. According to the shiba inu token website, 50% of the total supply of tokens was locked in Uniswap to provide liquidity (and the keys supposedly thrown away). The other 50% was given to Buterin, with the intention of them being taken out of circulation and not to be sold.
While the shiba inu tokens may seem friendly, they are causing havoc on the Ethereum blockchain. According to The Block Research’s Igor Igamberdiev, transactions involving the shiba inu tokens are now using up 10% of available gas, the token used to pay for Ethereum fees. According to Etherscan, this has helped raise fees to around $20 for a simple transaction and around $180 for a swap on Uniswap.
“SHIB mania, in many ways, repeats the events that took place earlier at [Binance Smart Chain] with meme tokens. However, the characteristic difference here is the potential lack of opportunity for rug pull,” he tweeted.
Other meme coins have been popping in recent weeks too. Doge killer (LEASH), which is part of the shiba inu token ecosystem, shot up from $600 to $8,400 this month. A token called dogelon mars (ELON), which follows shiba inu’s distribution strategy, rose 640% in the last week, reaching a current market cap of $634 million.
It’s worth noting that these types of tokens come with higher levels of risk. With no clear use case, these meme tokens may struggle to maintain traction in the long run. And as we saw with Dogecoin over the weekend, what goes up can quickly fall back down.
Correction: This story has been updated to mention that dogecoin's total supply is unlimited, and 129 billion is its circulating supply.
© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.