In hindsight, Dogecoin‘s (CRYPTO: DOGE) uncontrollable rally to the moon was probably one of the greatest trades of all time. If you invested just $100 into DOGE at the beginning of last year, it would be worth well over $11,890 today. And that’s after a 64% decline from its all-time highs.
But for those who missed out, the rise of a Dogecoin competitor, Shiba Inu (CRYPTO:SHIB), is rapidly filling that gap. In August last year, an anonymous person or entity known as Ryoshi created SHIB as a token on Ethereum‘s ERC-20 blockchain. A $100 investment made back then would have an incredible value of $1,618,066 today. Its user base has also exploded to over 585,000. So is there still time for those who missed out to buy SHIB?
One feral crypto
Even after the pump that sent its market cap over $10 billion, it’s easy to jump to conclusions as to why SHIB is worthless. Nowadays, anyone can create a token and launch it on an existing blockchain. No coding skills are required. In fact, there’s even a website — cointool.app — that allows users to set a token name, symbol, initial supply, add-ons (token burning, minting, etc.), and blockchain (such as ERC-20) for launch. The whole process takes as little as a few minutes.
But SHIB’s takeoff soon after its launch felt unreal. The name and logo itself quickly attracted a meme following among the crypto community during a record bull run. What’s more, at launch, Ryoshi donated 50% of the SHIB supply of 1 quadrillion tokens to Ethereum co-founder Vitalik Buterin. In May, Buterin donated $1 billion worth of SHIB to India’s Crypto COVID-19 Relief Fund. Amazingly, he then burned the remainder of his SHIB holdings — worth $6.7 billion — by sending them to a dead address, explaining that he did not want the power associated with controlling the blockchain. After all this fuss, however, SHIB hasn’t changed much from its inception. It’s really just a meme token for use in transactions. Though the same cannot be said for its “puppy friends.”
The unexpected twist
The creation of all this wealth hasn’t really tested developers’ greed as to lead to fraud, instead it greatly accelerated their plans to expand the Shiba Inu ecosystem. The most promising of which is the ShibaSwap, a decentralized exchange (DEX) providing a variety of lucrative financial services. There are three native tokens on ShibaSwap, SHIB, Bone ShibaSwap (CRYPTO:BONE), and Doge Killer (CRYPTO:LEASH). BONE is a governance token that allows users to vote on proposals put forth by developers, though its use has increasingly overlapped with the latter, LEASH, which provides liquidity when there’s low trading volume on ShibaSwap.
The DEX is rapidly gaining in traction. Total value locked (TVL) on ShibaSwap has surpassed $370 million. On Oct. 6, trading volume on ShibaSwap exceeded $435.6 million per day. To incentivize adoption, developers are issuing huge rewards in the form of BONE for users who deposit their crypto on the exchange to facilitate trading between altcoins.
As a result, yields have soared as high as 276%. This is because only 3% of 250 million BONE in circulation have been minted, and their emission rate is picking up. As an analogy, if a bank offered savings interest rates at 80%, but the inflation rate of one’s currency was at 50%, then the actual rate of return would be far lower. For integrity purposes, the ShibaSwap protocol has been audited by blockchain security firm CertiK. So like auditors who review the finances of publicly traded companies, one can ensure that funds are safe on ShibaSwap.
At the end of the day, keep in mind that SHIB is detached from activities on the ShibaSwap. So if one wants to take part in the ecosystem’s success, it’s better to buy BONE or LEASH instead, especially the former. Even on a diluted basis, BONE’s market cap is only $600 million. And one can earn it by simply depositing applicable crypto onto the exchange. It’s too late to invest in SHIB itself, as the fundamental value of ShibaSwap is very small to justify its valuation, not to mention that the two are in need of integration.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.