Could Shiba Inu Skyrocket After the Upcoming Ethereum Merge?

The most important milestone for Ethereum ( ETH -1.89% ) since its 2015 launch is arguably on the way. The merge of the Beacon chain with the Ethereum mainnet was expected to take place in June of this year. However, that timeline will be pushed back — probably by a month or two.

Even with this latest delay, the merge is a big deal for Ethereum. But other popular digital tokens could be impacted, as well, including Shiba Inu ( SHIB -2.38% ). Could Shiba Inu skyrocket after the upcoming Ethereum merge?

Image source: Getty Images.

Joined at the hip

Why would Ethereum’s merge impact Shiba Inu at all? There’s a simple reason: The two are, in a sense, joined at the hip.

Shiba Inu is an ERC-20-compatible token built atop the Ethereum blockchain. It was created as an Ethereum-based alternative to Dogecoin.

Just how tightly intertwined are Ethereum and Shiba Inu? Consider that purchases of virtual land in the Shiba Inu metaverse can only be made with ETH tokens and not with SHIB tokens. 

The merge of the Beacon chain, which uses the proof-of-stake (PoS) protocol, with the Ethereum mainnet will dramatically improve the blockchain’s energy efficiency. That will be good news for Shiba Inu.

Merge, shmerge

Will the Ethereum merge serve as a huge catalyst for Shiba Inu? Don’t count on it. 

The anticipated merge is certainly an important phase in the overall Ethereum upgrade. However, it’s not the final phase. The introduction of shard chains will come next, but not until 2023 (assuming there aren’t any delays). This phase is the one that investors are really excited about, as it will significantly increase the Ethereum blockchain’s capacity and slash transaction fees.

It’s possible that the shard chains probably won’t light a major fire beneath Shiba Inu’s price either. Why? For one thing, SHIB is just one of more than 40 of the top 100 cryptocurrencies based on market cap that are built on top of the Ethereum blockchain. There’s no reason to expect that Shiba Inu would benefit any more than any of these other rivals will from the Ethereum blockchain improvements.

However, probably the strongest argument why none of the phases of the Ethereum upgrade (including the merge) will turbocharge Shiba Inu is the anticipated launch of Shibarium. This layer-2 solution is expected to usher in significantly lower transaction fees for trading SHIB tokens, regardless of what happens with the Ethereum upgrade.

Sure, there hasn’t been a firm date set for when Shibarium will roll out. But it could happen as soon as this summer — well before the launch of shard chains on the Ethereum blockchain (and possibly even before the Beacon chain merge).

Other types of rocket fuel

Shiba Inu will need another type of rocket fuel to take off instead of the Ethereum merge. The Shibarium launch could fit the bill. And there are other potential catalysts on the way, as well.

Version 2.0 of the ShibaSwap decentralized exchange will feature a burn portal. The prospects of a sustained burning strategy for Shiba Inu has many investors excited. As SHIB tokens are burned and removed from circulation, the laws of supply and demand dictate that the price of the remaining tokens will move higher.

There’s also much anticipation about the aforementioned Shiba Inu metaverse. Virtual land is already for sale in this metaverse. It’s possible that the metaverse could expand the base of Shiba Inu holders in the future.

Shiba Inu should have several key milestones on the way. But the Ethereum merge probably won’t be a big deal for the meme coin.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.



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