Shiba Inu [SHIB] is at a crossroads as gas fees on its layer 2 network Shibarium surged by 2,024%. The surge raises critical questions about the future of the SHIB token.
BONE on Shibarium could pose a threat
Shibarium recently achieved a major milestone, with transaction volume surging 70% from 4,537 to 7,715, and active accounts soaring 157.14% from 42 to 108, according to ShibariumScan.
BONE is the native token of the Shiba Inu ecosystem and powers transactions on the Shibarium network. In short, when people transact with Shibarium, they transact with BONE.
As a result, BONE has gained about 3% in the past 24 hours and is valued at $0.425079 at press time. The rise highlights the ongoing challenges facing SHIB’s deflationary model, which is designed to keep supply in check.
Specifically, SHIB developers implemented a regular destruction procedure by sending tokens to inaccessible wallets, a strategy designed to manipulate value.
On Shibarium, users exchanged a portion of their BONE tokens for SHIB and sent it to a dead wallet. However, with transaction fees soaring 2,024%, this may discourage stakeholders and may indirectly affect the value of SHIB.
Where is SHIB now?
SHIB has locked positive lines on the daily chart and has risen by more than 5% in the past seven days. However, this momentum is largely a continuation of Bitcoin's rise in the past four days.
That being said, given that only 240,000 SHIB tokens were destroyed (an 85% drop from the previous 1.7 million), the news of the Shibarium network recording high gas fees may cause concern among stakeholders.
This argument could be validated if transactions on Shibarium slow down, resulting in less SHIB being destroyed.
On the contrary, if network activity remains attractive despite high gas fees, the SHIB community may have nothing to worry about.
However, despite the network hitting a new all-time high with 416.785 million total transactions, transaction volume has undoubtedly hit rock bottom recently — falling from 30,000 in mid-August to 11,000 at press time.
In short, new investors may be turning away from Shibarium due to high transaction costs. AMBCrypto said that if this trend continues for a while, it could hurt the long-term value of SHIB.
Is your portfolio green? View the SHIB Profit Calculator
Currently, SHIB’s appeal depends on Bitcoin [BTC] maintaining its $64,000 cap. If SHIB’s destruction rate slows, a retracement could occur.
In short, while the Shibarium network celebrates its milestone, high gas fees could adversely affect SHIB’s long-term prospects if a deflationary model is not implemented in a timely manner.
