- The Shibarium network has reached a major milestone with a 70% increase in transactions.
- However, one key factor could undermine SHIB’s deflationary model.
Shiba Inu (SHIB) is at a crossroads as gas fees on its layer 2 network, Shibarium, increase by 2,024%. This increase raises crucial questions about the future of the SHIB token.
BONE on Shibarium could pose a threat
Shibarium recently hit a major milestone, with trading volume up 70% from 4,537 to 7,715, and active accounts soaring 157.14% from 42 to 108, according to ShibariumScan.
BONE, the native token of the Shiba Inu ecosystem, powers transactions on the Shibarium network. Simply put, when you use Shibarium to transact, you do so with BONE.
Source: Dune
As a result, BONE has surged by around 3% over the past 24 hours, valuing itself at $0.425079 at press time. This surge highlights an ongoing challenge to SHIB’s deflationary model, which aims to keep supply in check.
To provide some context, SHIB developers implement a routine burning procedure by sending tokens to inaccessible wallets, a strategy designed to manipulate value.
On Shibarium, users convert a portion of BONE tokens to SHIB, sending them to dead wallets. However, with transaction fees increasing by 2,024%, this could deter stakeholders, which could indirectly impact the value of SHIB.
Where is SHIB right now?
SHIB has recorded consecutive green candles on the daily price chart, rising by more than 5% over the past seven days. However, much of this momentum follows Bitcoin’s bullish moves over the past four days.
That said, with only 240,000 SHIB tokens burned – a staggering 85% drop from the previous 1.7 million – news that the Shibarium network is seeing high gas fees could worry stakeholders.
This thesis could be validated if transactions on Shibarium slowed down, leading to fewer SHIB burns.
Conversely, if network activity remains attractive despite high gas fees, the SHIB community may have less to worry about.
Source: ShibariumScan
However, while the network is reaching new highs, with 416.785 million total transactions, recent transaction volume has certainly bottomed out, dropping from 30,000 in mid-August to 11,000 at press time.
In other words, new investors may be discouraged from accessing Shibarium as transactions become expensive. According to AMBCrypto, if this trend continues over an extended period of time, it could hurt the value of SHIB in the long run.
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Currently, SHIB’s appeal rests on Bitcoin (BTC) holding at the $64,000 ceiling. A retracement could follow if SHIB’s burn slows down.
In short, as the Shibarium network celebrates its milestone, high gas fees could hurt SHIB’s long-term prospects if its deflationary model is not implemented soon.
