It should be noted that token-burning mechanisms are not something new. For example, back in August 2021, a similar feature appeared on the Etherium network thanks to a London update. Since then, each transaction ends up destroying a certain amount of ETH, which reduces the cryptocurrency’s overall supply.

The rate at which this is happening is surprising. As of today, the equivalent of $7.66 billion of ether has dropped out of the blockchain. Consequently, no one ever uses these coins again.

The volume of ethers burned

A similar feature has appeared for the BNB cryptocurrency: this has happened with the BEP-95 update. Here, BNB is also burned with each new block in the network.

As of today, 75,368 BNBs, equivalent to $30.15 million, have been taken out of circulation.

Interim results of BNB burnout

What’s happening with Shiba Inu

The so-called Shib Burning Portal initiative was launched this weekend, as the project’s official Twitter account announced. More than 8 billion SHIBs have been incinerated in the first 24 hours alone. At the time of writing, the number of tokens destroyed has already surpassed the 12 billion mark.

According to Decrypt’s sources, the burning mechanism itself is based on a simple principle that other crypto projects have used before. Essentially, tokens are simply transferred to a “burn” address, that is, a wallet from which they cannot be retrieved – and never by anyone.

Once the token is sent to the burning address, it is gone forever. As a result, the “burned” cryptocurrency reduces the supply, making tokens more rare.

In other words, the so-called supply and demand theory is used here. When demand is stable and supply decreases, the asset becomes more valuable as the volume available for purchase decreases. Accordingly, under ideal conditions, this increases the competition for the right to buy, which eventually forces potential buyers to offer more.

The token burning page

Shib Burning Portal was launched in collaboration with Ryoshis Vision (RYOSHI), an ERC-20 standard token aimed at supporting the growth of the SHIB ecosystem. Users who choose to burn their SHIBs receive another token called burntSHIB, which pays rewards in RYOSHI tokens at a certain rate. Accordingly, this procedure benefits investors in two ways.

According to the developers, 0.49 per cent of all RYOSHI transactions will be distributed to burntSHIB token holders. A more indirect incentive is the aforementioned reduction in Shiba Inu’s offering, which could pay off in the long run. Here is an expert commentary on this development.

A shortage of SHIB can boost the price of tokens, benefiting investors, but this is not always guaranteed.

At the time of writing, the price of SHIB has risen by almost 6.5 per cent in the last 24 hours. That is, the developers’ announcement did coincide with a local rise in the value of the altcoin, as can be seen in its chart.

Shiba Inu exchange rate over the last 30 days

Recall, 1 quadrillion SHIB tokens were issued at the launch of the project. Notably, the developers of the project sent about half of these tokens to the cryptocurrency wallet of Etherium creator Vitalik Buterin, thus seemingly guaranteeing the project's good results. Buterin himself came up with a very original way to get rid of a significant portion of the coins, as he later stated that he "didn't want to take on so much responsibility".

In the end, Vitalik burned 410.24 trillion SHIB, which is almost 90 percent of the amount received by the developers. Tokens equivalent to $6.7 billion, which is the remaining coins in his wallet, Buterin donated to charity. So why did he decide to voluntarily give up such a huge amount of money?

One of Vitalik’s transactions at SHIB for charity

The point is that with half of the offer of all the project’s coins in hand, Buterin could have completely collapsed the value of SHIB in just a couple of clicks of his mouse. Admittedly, such a decision would obviously not please the cryptocurrency community. That’s why he decided to “spare himself any responsibility”.

It should be noted that after the implementation of the burn mechanism, it was not without surprises. In particular, an anonymous major investor incinerated a billion SHIB, paying $23,370 for it. Accordingly, there are plenty of people willing to influence the overall token offer and lower it as well. Here’s a relevant screenshot of the transaction.

Burning a billion SHIB tokens


We think this initiative could have a good impact on what's happening with Shiba Inu. It is likely that the supply of the asset will now decline markedly - and in theory, if demand persists, this could have a good effect on the price. In addition, the cryptocurrency is automatically opposed to fiat currencies like the dollar, the volume of which has increased significantly in recent years. Well, investors have always been attracted to deflationary assets - or at least those whose supply growth rates are predetermined.

Share your views on the situation in our millionaires’ cryptochat. There we will discuss other important details of the situation.