It's coming. And it's coming soon.
I'm referring to Shibarium, the much-anticipated layer-2 solution for Shiba Inu (SHIB -0.38%). As for when Shibarium will launch, project lead Shytoshi Kusama recently stated, "Very soon actually."
Shiba Inu fans hope that the layer-2 solution could help SHIB deliver monster returns this year. But could Shibarium even send Shiba Inu soaring to $0.001?
Lots of goodies on the way
Why are Shiba Inu investors so pumped about Shibarium? The layer-2 solution will bring several benefits to the table.
Most importantly, the launch of Shibarium will usher in lower transaction fees. Shiba Inu is built on top of the Ethereum (ETH -0.05%) blockchain. As a result, its gas fees have been much higher than anyone would like.
The developers behind Ethereum are working to address the issue with a major upgrade. However, Shibarium could solve the problem for Shiba Inu even more quickly.
Another thing that Shiba Inu investors eagerly await with Shibarium is a burning mechanism. There are currently over 549 trillion SHIB tokens in circulation. The only way to reduce this number is to burn existing tokens.
While some burning is already going on, the launch of Shibarium is likely to accelerate the trend. The fewer tokens in circulation, the higher SHIB's price will rise.
Last, but not least, Shibarium will serve as the foundation for other projects. These include the Shiba Inu metaverse that many hope will become a huge catalyst for Shiba Inu in its own right.
A tall order
But Shibarium propelling Shiba Inu to $0.001 would without question be a tall order. To reach that level from where it stands now, the digital token would need close to a 44x gain.
To be sure, such a tremendous return isn't impossible. Remember, Shiba Inu skyrocketed more than 251,000x in 2021. And that included a major slump toward the end of the year.
However, that jaw-dropping performance happened as Shiba Inu emerged from relative obscurity to become one of the most well-known cryptocurrencies on the planet. It's much more difficult to generate sizzling gains from the position Shiba Inu is in now.
Shiba Inu would need to nearly quadruple to get back to its all-time high. Even if it was able to accomplish this goal, though, the meme coin would still be nowhere close to hitting $0.001.
Too many variables
I think that there's a good chance that the upcoming launch of Shibarium will provide a big catalyst for Shiba Inu. Lower transaction fees along with the projects built atop the layer-2 solution could attract more investors. Use of the burning mechanism on Shibarium could remove tokens from circulation and drive SHIB's price higher.
The problem as I see it, however, is that there are too many other variables at play that impact Shiba Inu. Most importantly, the overall environment for cryptocurrencies needs to improve dramatically for the digital token to really take off.
I'd love to be able to say that such a positive shift is right around the corner. But the reality is that there are few reasons to be so optimistic right now.
Shibarium could very well be a game-changer for Shiba Inu. Unfortunately, the crypto game involves a lot of other moving parts.