From memecoin to mainnet: What’s Shibarium in crypto?

During cryptocurrency’s 2021 bull run, investors rushed into speculative projects featuring animated animal avatars. Beyond the headline-grabbing Bored Apes and Pudgy Penguins, Shiba Inus stole the spotlight. Dogecoin (DOGE) remains the largest memecoin with a Shiba Inu mascot, but a competitor, self-styled as “Shiba Inu (SHIB),” gained significant attention. 

At its peak, SHIB’s market cap reached $38 billion, prompting speculation within the crypto community about its potential to fulfill its goal as a “DOGE killer.” But SHIB’s developers weren’t just focused on hype – they had bigger plans for expanding the token’s utility.

In this guide, we’ll explain what Shibarium is, how it strengthens SHIB’s ecosystem as a Layer 2 (L2) scaling solution, and how it improves transaction speed while lowering costs.

What’s Shibarium? Explaining Shibarium vs. Shiba Inu

Shiba Inu started as a playful nod to Dogecoin, but the SHIB Army – a passionate community of SHIB supporters and investors – takes it seriously. Following SHIB’s rise, lead developers focused on increasing the token’s efficiency and utility. One of their most ambitious efforts was Shibarium, a separate decentralized platform built on the Ethereum (ETH) blockchain.

Shibarium belongs to a category of blockchains called Layer 2 scaling solutions, designed to improve transaction speeds (gas fees) and lower costs on Ethereum’s mainnet. While SHIB is an ERC-20 token, Shibarium expands its ecosystem by integrating the token into its architecture, providing users a faster and cheaper alternative.

Shiba Inu’s enigmatic founder, “Ryoshi,” first proposed Shibarium as a way to increase SHIB’s use cases and improve scalability. Although Ryoshi left Shiba Inu and deleted all prior blog posts and tweets, other SHIB developers – particularly Shytoshi Kusama – continued the mission with projects like Shibarium.

In August 2023, Shibarium officially launched and remains in active development. At its core, Shibarium relies on a proof-of-stake (PoS) consensus algorithm, where node operators stake tokens called BONE to validate transactions and earn crypto rewards. The network also features a proprietary crypto bridge, enabling users to transfer Ethereum-based tokens into and out of the Shibarium ecosystem.

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Key features of Shibarium

Like other Layer 2 solutions like Arbitrum (ARB), Shibarium stands apart from the Ethereum mainnet with faster speeds and lower gas fees. However, its developers see Shibarium as more than just a way to process quicker transactions.

• Lower gas fees: Layer 2s can establish their own consensus mechanisms, reducing congestion-related costs. On Shibarium, transaction fees rarely exceed $0.01 per transfer, making it a more cost-effective alternative to the Ethereum mainnet.
• Scalability: One reason Shibarium maintains such low fees is its ability to handle large volumes of transfer requests. With higher transaction throughput, Shibarium can scale operations and onboard more users as the SHIB Army grows.
• Support for dApps: Beyond providing a scalable and cost-effective solution, Shibarium welcomes third-party developers looking to build decentralized applications (dApps) in areas like non-fungible token (NFT) trading and decentralized finance (DeFi). Since Shibarium is compatible with the Ethereum Virtual Machine (EVM), existing Ethereum dApps can easily migrate to the network.
• Expanding ecosystem use cases: While Shibarium encourages third-party integrations, its developers are also growing the network’s native ecosystem with decentralized features. For example, it now includes a decentralized exchange (DEX), ShibaSwap, and the Shiba Inu Metaverse game.

Shibarium ecosystem tokens

SHIB remains central to the Shiba Inu ecosystem, but it’s not the only token in the project. As Shibarium creates new opportunities for the SHIB Army, Shiba Inu developers have expanded their crypto economy with additional tokens, each serving a distinct function.

• SHIB: Although SHIB is the original token in Shiba Inu’s ecosystem, it isn’t the primary force behind Shibarium. Unlike newer tokens, SHIB isn’t used for staking, governance, or gas fees. Instead, it’s primarily associated with payments on the network.
• BONE: Appropriately, BONE serves as Shibarium’s “backbone” due to its role in Proof-of-Stake (PoS) consensus. In addition to staking, BONE grants governance rights and is used to pay gas fees for every transaction.
• LEASH: Originally designed as a rebase token pegged to Dogecoin’s price – hence the nickname “Dogecoin Killer” – LEASH has since evolved into a VIP token with exclusive rewards due to its limited supply.
• TREAT: The newest token in Shiba Inu’s ecosystem, TREAT primarily serves as a reward and incentive mechanism for Shibarium users. Like BONE, TREAT also carries governance and voting rights.
• SHI: To increase financial activity on Shibarium, developers are working on a native stablecoin, SHI, designed to maintain a 1:1 value of $0.01. As of this writing, SHI remains in development.

How to use Shibarium

Anyone interested in exploring Shibarium needs a few crypto tools to get started. First, download a crypto wallet compatible with the Shibarium blockchain. There’s no singular “Shibarium wallet” – any wallet that supports the Ethereum Virtual Machine (EVM) is compatible with Shibarium. Popular wallets include MetaMask, Trust Wallet, Rainbow Wallet, Coinbase Wallet, and WalletConnect (which also enables connections with other Ethereum-compatible wallets).

After setting up a Shibarium wallet and securely storing the seed phrase, the next step is to buy and send BONE tokens to the public address. A complete list of centralized and decentralized exchanges offering BONE is available under the “Markets” tab on third-party crypto price aggregators like CoinMarketCap. While not required, sending some SHIB to the wallet may be helpful for transactions. Shibarium also offers an onchain option to buy BONE with a card, though this method involves additional fees.

Once users have a Shibarium-compatible wallet with BONE, they can connect it by clicking “Connect Wallet” in the top-right corner of Shibarium’s homepage and selecting their wallet provider. If the connection is successful, they can use the “Bridge” icon to transfer Ethereum-based tokens like SHIB or BONE into Shibarium and stake BONE in a staking pool. Alternatively, they can explore Shibarium dApps like the DEX ShibaSwap or the game Shib the Metaverse.

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Disclaimer: This post is informational only and is not intended as tax advice. For tax advice, please consult a tax professional.