Shiba Inu (SHIB) Burn Rate at 0: Why Did It End?

The Shiba Inu burn mechanism was promoted as a deflationary instrument to lower the supply of tokens and encourage sustained price growth. The experiment has lost steam now that that rate has essentially fallen to zero. The answers are simple.

Why SHIB burns are useless

1. First, there is no direct financial incentive for someone to voluntarily destroy their own tokens in order to burn SHIB. In contrast to Ethereum’s EIP-1559, which links burns to real network usage, SHIB’s procedure was optional and solely relied on community support. After the initial excitement subsided, participation declined. The protocol itself lacked a sustainable mechanism, so the burn movement was doomed to fail.

2. Second, the burn’s primarily symbolic nature was soon recognized by the larger market. Notwithstanding the destruction of millions of tokens, SHIB’s nearly 589 trillion total circulating supply far outstripped those figures. The only significant incident occurred in 2021, when Vitalik Buterin transferred 410 trillion SHIB to a dead wallet. Since then, every burn has been a rounding error, with no discernible impact on tokenomics or price.

What’s next for SHIB?

Burn activity’s collapse highlights how weak SHIB’s foundations are still. Its price has followed the general meme coin cycle, which saw sharp increases in 2021, followed by a protracted drop and stagnation. Due to its inability to recover its peak, and the lack of a structural reduction in supply, SHIB is now solely dependent on speculative demand. SHIB lacks a plausible deflationary driver, in contrast to Ethereum’s continuous burn or Bitcoin’s halving mechanism.

In the future, burn recovery is not likely. The community has shown that it is unable to sustain the endeavor, and developers have failed to incorporate significant burn mechanics into the ecosystem. It was never really a financial fact but rather a marketing ploy that token destruction could support value.

For investors, the fact that SHIB burns at zero reveals only one simple truth: the token’s prospects are bleak in the absence of fresh demand.