What is Shibarium?

What is Shibarium?

Shibarium is a Layer 2 blockchain created by Shiba Inu's founder, Ryoshi, to address Ethereum's high transaction fees. It offers a cost-effective and scalable solution for fast, low-cost transactions, benefiting users and developers within the Shiba Inu ecosystem.

Built on Ethereum, Shibarium uses smart contracts and a Proof-of-Stake (PoS) system to enhance security and reduce gas fees. Validators stake BONE tokens, aligning their success with the network’s performance.

Shibarium also includes a SHIB burning mechanism, promoting a deflationary model to help maintain token value. This platform supports scalable interactions within decentralized applications, driving growth in the Shiba Inu community.

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How Does Shibarium Work?

Shibarium functions as a sidechain to the Ethereum blockchain, enhancing throughput and speed while inheriting Ethereum's security. Its architecture separates consensus and block production into distinct layers to ensure efficient transaction processing, robust security, and scalability.

Here's how the Shibarium network operates:

• Transaction Initiation: Users initiate transactions on Shibarium via decentralized applications or smart contracts.
• Ethereum Layer: Core contracts on the Ethereum mainnet manage the staking of the BONE token and other functions. These contracts enable users to stake BONE tokens and become validators, earning staking rewards for validating state transitions on the Shibarium network.
• Heimdall Layer (Consensus): Heimdall nodes, operating alongside the Ethereum mainnet, manage block aggregation. This layer validates blocks since the last checkpoint, creates a Merkle tree of block hashes, and periodically publishes the Merkle root to the Ethereum mainnet.
• Bor Layer (Execution): Bor nodes handle block production by executing transactions and aggregating them into blocks. Bor block producers are periodically shuffled by Heimdall validators to maintain network security and efficiency.
• Checkpoint Mechanism: Every few blocks, Heimdall validators create a checkpoint of the transaction blocks' Merkle root and submit it to the Ethereum mainnet.
• Asset Transfers and Burns: Shibarium facilitates asset transfers between its layer and the Ethereum mainnet. It incorporates a burning mechanism to reduce token supply.

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Shibarium Tokenomics and Burn

Bone ShibaSwap (BONE) is the governance token for the Shibarium ecosystem, capped at 250 million coins. Although official documents have been deleted, past records show that 10% of emissions are allocated to a Multisig-controlled treasury and development fund, while 0.05% of exchange fees are distributed to tBONE holders.

From what we've retrieved here is how Shibarium's tokenomics and burn work:

• BONE Token Usage: BONE serves as the primary gas token for transactions on the Shibarium network and the ShibaSwap DEX. It is crucial for executing smart contracts, facilitating transfers, and interacting with decentralized applications. It can also be swapped for other tokens.
• Staking: To stake BONE a person needs to choose a validator, connect a crypto wallet, and follow further instructions on the shibarium website.
• Liquidity Providing: Users can add BONE tokens to liquidity pools on ShibaSwap. Participants receive rewards from the swap fees generated by traders using the DeFi pool.
• Transaction Fees: Shibarium maintains low transaction fees to create a cost-effective environment for users and developers. Fees are divided into a base fee, which is burned to apply deflationary pressure, and a priority fee, which compensates validators.
• Burning Mechanism: A portion of the transaction fees (base fee) is burned to decrease the BONE supply over time. This deflationary tactic aims to enhance token value as the network expands.
• Security and Decentralization: The tokenomics structure promotes decentralization and network security. By requiring BONE staking for network participation, validators are incentivized to maintain the network’s stability and security.

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What is ShibaSwap

ShibaSwap is a decentralized exchange that operates on the Shibarium network, providing a platform for trading tokens directly from users' wallets. ShibaSwap offers incentives and rewards to ecosystem participants, such as liquidity providers, through its user-friendly interface.

A key feature of ShibaSwap is the Bury function, which allows users to stake their Shiba Inu ecosystem tokens (SHIB, LEASH, BONE) to earn passive income in the form of BONE rewards. This staking process is secure and low-risk, enabling users to earn rewards proportional to their staked assets.

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Who Created Shibarium?

Shibarium was introduced by Ryoshi, the creator of the Shiba Inu meme coin. It is a Layer 2 blockchain designed to promote decentralization within the Shiba Inu ecosystem. Shibarium aims to address the high transaction fees and scalability issues associated with the Ethereum network, where Shiba Inu originally operates. By offering a more efficient and cost-effective platform, Shibarium enhances the accessibility and usability of blockchain technology for developers and users, facilitating smoother transactions and applications within the Shiba Inu community.

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Bottom Line

Shibarium aimed to enhance the Shiba Inu ecosystem by addressing Ethereum's high transaction fees and scalability issues, leveraging smart contracts, a Proof-of-Stake system, and a deflationary SHIB burning mechanism. However, despite these innovations, it has struggled to gain significant traction, with only $1.2 million in Total Value Locked (TVL).

This reflects the challenges Shibarium faces in competing with more established Layer 2 networks, suggesting that while it offers potential, its adoption and impact have been limited so far.