We'll be Blunt - SHIB Burn Portal Makes No Sense

Save your rotten tomatoes. Hear us out first. On the surface, the Burn Portal makes every bit of sense. It was launched by the official devs (credibility), it lets you burn SHIB (utility) and it’s free to use (free-ability, if you will). And while the credibility part leaves no doubts, the other two are questionable at best.

Utility

Ever since its launch back on April 23, the Burn Portal managed to incinerate some whopping 60 billion tokens worth around $600,000 at the time of writing. Impressive, except not only did the price of SHIB not go up, it actually halved - from the low at $0.00002474 on April 24 to where it currently is at $0.00001110.

We can chalk it up to the world being a crazy place at the moment - you know, this pesky inflation, that war in Ukraine, the Tera (Luna) mess, Elon Musk having not colonized Mars yet etc. And if you try real hard and say that the 60 billion tokens burned through the portal is a drop in the bucket (around 0.011320% of the total circulating supply) and we just need to keep on burning more…

Okay. Cool.

“Free-ability” and rewards

However, the logic of the burn portal still doesn’t make much sense. The idea is simple: the holders burn their own SHIB via the portal, and in return they get rewarded another token - burntSHIB, which pays rewards in RYOSHI tokens on top of 0.49% of all RYOSHI transactions being distributed among the hodlers of burntSHIB. 

Let us translate that into human language.

You trade your SHIB in for another token, that’s less valuable (a single RYOSHI at the time of writing is worth $0.00000003477 per token versus SHIB’s $0.00001110) and has at least 290 trillion tokens in circulating supply! That's half of SHIB's current supply, and by cryptocurrency standards is considered quite huge.

You still get your newly-acquired RYOSHI, but where in all of this do you specifically benefit from burning your SHIB? In other words, where’s your SHIB that’s now worth more money due to the burns?

That’s right, you had to burn it and now you’re stuck holding another token that needs years of burning before you can get its supply to more sane levels.

Sustainability

The fact that the burn portal requires people to burn their own money is problematic enough on its own.

Simple math. For the current 1,1 million of SHIB holders to be able to burn even half of the token’s supply, they’d have to burn around 270 trillion SHIB, worth at least 3 billion dollars! That’s $2,700 per holder they have to burn of their own money! And that’s the bare minimum.

If SHIB’s price doubles, it’s $2,700 x 2 now. The price triples, you get the idea.

So, how sustainable is the Burn Portal? At what point will the hodlers exhaust their portfolios enough that they can’t burn any more of their own SHIB, ultimately bringing the portal to a halt?

Burns must rely on the burn revenue coming from a third party, not out of hodlers’ own pockets. Otherwise, it defeats the whole idea of burning the token for the benefit of those hodling it. If the hodlers burn their tokens, then who’s going to be left to enjoy the benefits?