Shiba Inu (SHIB 4.82%) is worth about $6 billion (as of Oct. 20), putting it just outside of the top 20 cryptocurrencies. At first, that looks like an impressive market cap for a meme coin. But when it hit an all-time high in 2021, it had a market cap of $41 billion, so Shiba Inu has had a steep fall since its glory days.
Fortunes change quickly in the crypto market. Just last year, Shiba Inu's price increased by 105%. If you've been thinking of buying the dip on this meme coin, let's take a look at Shiba Inu and where it could be in a year's time.
Image source: Getty Images.
How Shiba Inu works
Shiba Inu is a crypto token minted on the Ethereum blockchain. It uses a proof-of-stake consensus mechanism to validate transactions, which is much more energy-efficient than proof of work, the system that Bitcoin uses. Although this is a point in Shiba Inu's favor, it's not exactly a unique feature, as quite a few cryptocurrencies use proof of stake.
Since Shiba Inu runs on Ethereum, transaction speed and costs can be an issue because that blockchain can get congested. In 2023, the Shiba Inu team launched Shibarium, a Layer-2 (L2) network (a secondary blockchain built on top of another blockchain).
Shibarium offers faster transactions with lower gas (user) fees, because it takes those transactions off the Ethereum blockchain to process them. It's also more than just a way to speed up transactions -- it's a blockchain ecosystem where users can stake their tokens, swap cryptocurrencies on the decentralized ShibaSwap exchange, and vote on proposals that shape the future of Shiba Inu.
In an ideal scenario for Shiba Inu fans, Shibarium will attract developers and users. This would help the price of Shiba Inu, since that's the native cryptocurrency in the ecosystem and is used to pay transaction fees.
The problem with Shiba Inu
I mentioned earlier that Shiba Inu's proof-of-stake mechanism isn't unique, and that criticism also applies to Shibarium. There are plenty of L2 networks and blockchain ecosystems out there. The differentiator is the amount of activity on the network.
Shibarium has gone through significant ups and downs in terms of activity, but lately, the number of transactions has plummeted. In July and August, it regularly had more than 4 million transactions per day. Daily transactions have been less than 10,000 for much of October.
The total value locked (TVL) and devoted to development projects on Shibarium is about $870,000, according to DefiLlama. That's an extremely low amount of money on Shibarium, considering Shiba Inu's market cap of almost $6 billion. For comparison, Ethereum has a market cap of $470 billion and $84 billion in TVL. But let's compare Shibarium to another L2 network: Arbitrum is a third the size of Shiba Inu, with a market cap of about $2 billion, but it has almost $4 billion in TVL.
Shibarium has never been an innovative use of blockchain technology, nor has success with its ecosystem driven Shiba Inu's growth, because it doesn't have either of those. Like other meme coins, Shiba Inu lives and dies on hype and speculation.
A one-year outlook for Shiba Inu
I think the most likely scenario for Shiba Inu is that it will be worth less in one year's time than it is today. Outside of a few short spikes here and there, it has largely been declining in value after peaking in 2021.
However, cryptocurrencies are known for volatility. Maybe Shibarium will take off, although it doesn't look all that different from the many other blockchain ecosystems doing the same thing. Or Shiba Inu's price could jump temporarily, due to renewed interest in meme coins. That's certainly possible, but a possibility isn't an investment thesis.
Even after the recent crypto flash crash, several of the top coins are up on the year. Bitcoin and Ethereum, two cryptocurrencies that have demonstrated legitimate value as investments, have each risen by about 17% in 2025. Shiba Inu is down 54% for the year. There's no compelling reason to believe that the next year will be any better.
