The launch of the Layer 2 network Shibarium was tipped as a catalyst that could spark an upward trend for the Shiba Inu token. However, less than 24 hours after launch, a certain bridging issue looks to have had an undesirable impact on SHIB’s price.
Shibarium’s Launch
Shibarium officially launched on August 16, following so much hype around the network. And despite joining an already saturated layer-2 space, the Ethereum layer-2 network was set to position itself as a major player in the decentralized finance (DeFi) world.
Shibarium’s launch was highly significant for the Shiba Inu community as the network employs SHIB as its ecosystem token, which would undoubtedly increase the meme token’s value as activity on the network increases.
Shiba Inu’s developers also hoped to use Shibarium to change Shiba Inu’s outlook by portraying it as a serious blockchain project rather than just being known by its meme token SHIB, which is themed after the Shiba Inu dog breed.
The developers have chosen to incorporate fellow dog-themed tokens, BONE, TREAT, and LEASH governance tokens on the Shibarium chain.
According to them, SHIB tokens would be burned every time a transaction was carried out on the layer 2 network. This led to anticipation around a consistent reduction in supply leading to a price increase. But the network’s launch seems to have had the opposite effect.
SHIB price falls following L2 launch | Source: SHIBUSD on Tradingview.com
Where It All Went Wrong
To further attract liquidity from other ecosystems on the Ethereum network, Shibarium developed a bridge to ease interoperability between the network and Ethereum. That way, users on Ethereum could easily move their assets and enjoy the functionalities on the layer-2 network, such as cheaper transaction fees.
However, the functionality of the Shibarium bridge has quickly been questioned as users who tried to utilize the Shibraium bridge upon launch reported being unable to access their funds on the new chain. At the time of writing, a combined total of $1.7 million (945 ETH) in users’ funds are currently stuck in the bridge.
Users quickly made their grievances known on the Discord server, which led the team to quickly shut down the channel to quench further agitations. However, what shocked the crypto community was that Shiba Inu lead Shytoshi Kusama revealed that the funds stuck in the bridge could not be recovered.
According to him:
“We fucked up hard, we can’t recover the ETH bridged.”
As expected, SHIB’s price has experienced a downward trend following this event, currently down about 7% in the last 24 hours. The price of other Shibarium governance tokens has also spiraled down following this event.
BONE, TREAT, and LEASH are down 11.80%, 14.50%, and 20%, respectively in the last 24 hours, according to data from CoinMarketCap.
Featured image from iStock, chart from Tradingview.com
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