As a seasoned analyst with years of experience under my belt, I can confidently say that the Shiba Inu team’s introduction of a burn portal for their Shibarium lawyer-2 solution is a strategic move that could potentially drive up the value of SHIB tokens. The practice of burning tokens to reduce supply is not new, but its implementation in the context of Ethereum’s EIP-1559 has proven to be effective in creating scarcity and fostering a deflationary narrative.
The Shiba Inu team has introduced a burn portal for the Shibarium lawyer-2 solution.
As a researcher, I find it intriguing how token burning has become a widespread strategy within our industry. Ethereum Improvement Proposal (EIP) 1559 was enacted during the London hard fork in 2021, which included the implementation of token burning as a byproduct of transaction fees. This was achieved by introducing a flexible block size that serves as an indicator of network demand. The update introduced a base fee, a mandatory cost that is calculated algorithmically based on the current level of network usage.
In simpler terms, the base fee is permanently removed from circulation within the Ethereum network, contributing to its deflationary nature. This initial step played a significant role in shaping the idea that Ethereum is deflationary by design.
The EIP-1559 features were introduced with Shibarium’s Burn hard fork.
Each Shibarium transaction results in a base fee being locked on in the burn contract. As soon as enough BONE tokens accumulate, users will be able to initiate the burn process with the help of the newly launched ShibTorch.
Currently, users must have a minimum of 100 BONE tokens on hand to start a burn process. Once they connect their digital wallets, they can view the precise number of SHIB tokens set for burning, along with the unique transaction ID.
It’s important to mention that just 70% of base fees are destroyed, while the remaining amount is accumulated in the treasury.
BONE tokens are swapped for SHIB tokens using the Ethereum network, thereby taking those SHIB tokens out of circulation.
Introducing the Burn Portal may act as a positive factor boosting Shib, as it has the potential to substantially decrease the number of tokens in circulation.
SHIB is up 0.8% over the past 24 hours, according to CoinGecko data.
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2024-08-16 23:36