All hail the Shiba? Rise of Dogecoin pretenders fueled by meme frenzy

Shiba Inu joins in at the top of the dog meme coin phenomenon as Musk announces developer support for Dogecoin.

Shiba Inu (SHIB) has been the talk of the cryptoverse and mainstream media recently. It is a meme coin themed around the Shibu Inu dog, a Japanese dog breed that Dogecoin (DOGE) is also basing its image on. According to data from CoinMarketCap, SHIB hit its all-time high of $0.0000388 on May 10 after it surged more than 2,500% from trading at $0.00001478 on May 7.

The token has now been listed on most of the major exchanges, such as Binance, Coinbase, FTX, OKEx and even Binance’s Indian counterpart, WazirX. It had also briefly broken into the top 20 cryptocurrencies list by market capitalization. Currently, it has dropped off in the rankings, with a market cap of just over $6 billion. Earlier on May 10, SHIB’s market capitalization hit an all-time high of over $13.5 billion.

SHIB was launched in August 2020, soon after Dogecoin’s hype on TikTok sent the coin to a two-year high. According to its “Woof Paper,” a total of 1 quadrillion tokens were minted, 50% of which was locked into Uniswap with the keys thrown away. The other half, however, was sent to Ethereum co-founder Vitalik Buterin’s wallet in an uninvited fashion.

The intention behind sending 50% of the tokens to Buterin was to ensure price stability since ideally, the demand-supply dynamic wouldn’t allow the price to swing rapidly since one entity owns a large portion of the circulating supply.

However, Buterin gave away over $1 billion worth of SHIB to a coronavirus charity in India known as the India Covid Relief Fund. This led to the price of the coin crashing by over 50% almost immediately as the market began to panic.

Disclaimer: The coins described below are highly volatile and speculative in nature. This article is not an endorsement of these coins. If you opt to trade any of these coins, do so at your own risk.

Dogecoin killers out there? Maybe not just yet

According to the coin’s woofpaper, it claims to be the “Dogecoin Killer,” citing the enormous supply of the token as a differentiating factor between the two. In fact, on May 10, the demand for Shiba Inu grew so much that Binance ran out of ETH addresses since the token is based on the Ethereum blockchain.

Johnny Lyu, CEO of KuCoin — a crypto exchange — spoke with Cointelegraph about the positives of such high demand from retail investors: “It can be considered as a way to quickly learn about blockchain and the cryptocurrency industry. It provides new users with a lower threshold compared to some mainstream cryptocurrencies such as Bitcoin and Ethereum.”

As the token is competing with DOGE, it’s important to assess how it’s performing relative to Dogecoin. At the time of writing, SHIB is trading in the $0.000016 range, amounting to around 10,000% of gains in the last 30 days in comparison to around 300% gains in the same 30 days for Dogecoin, which is currently changing hands at roughly $0.50. Speaking of Dogecoin’s use cases, Lyu further elaborated:

“Dogecoin has a unique cultural symbol along with abundant application cases. For example, SpaceX announced recently that it will launch the DOGE-1 moon mission, and the cost will be paid by Dogecoin. This will allow more people to learn about and use Dogecoin along with Musk’s preference for Dogecoin.”

DOGE crashed by more than 25% following Tesla CEO’s Saturday Night Live appearance where he dropped several references to the meme token. His appearance also led to the price of Tesla dropping 14%, thus losing nearly $20 billion in market value.

However, on May 14, Musk made an announcement that he would be working with the DOGE development team to “improve system transaction efficiency.” This news led to the rebound of the token’s price from $0.38 to trading in the $0.50 range as the community envisions further adoption by brands and firms as payment options available to retail investors.

Jake Wujastyk, chief market analyst at TrendSpider — a technical analysis software company — told Cointelegraph that the DOGE price drop before SNL was not a coincidence: “This flush in price to the mid-$0.30s was conveniently timed right before this announcement by Elon Musk.” He further added:

“Dogecoin moved down to the volume shelf around $0.35 earlier in the week (an area where people who originally had profits in the $0.40s+, were back to break even). This is exactly where technical traders should have expected a bounce as supply dried up in this area (due to a lack of profits held by those that held DOGE around $0.35 originally).”

While SHIB is currently the most talked-about dog-themed meme coin apart from DOGE, there are several other highly volatile and speculative dog meme tokens that are floating around in the cryptoverse, which were launched in the hope to replicate the performance of DOGE.

One of the other coins from the same development team as SHIB is called LEASH. This coin has a limited total supply of just 107,647 tokens. Due to this low supply and the hype around the project, the sister token of Shiba Inu has seen astronomical gains of 6,500,000% since the beginning of May.

Another such coin is Kishu Inu (KISHU), a token themed around Shiba Inu’s distant relative, the Kishu. The project’s white paper speaks of a farming decentralized application in the future similar to SHIB’s upcoming ShibaSwap marketplace where users can swap the token and even earn rewards through staking. The coin is currently changing hands at $0.00000001, posting over 4,000% gains in the last 14 days.

Another coin that is trying to capture the DOGE hype is Dogelon Mars (ELON), a coin based on Elon Musk and his love for space travel. Similar to SHIB’s tokenomics, upon minting, 50% of the supply was sent to Buterin’s wallet address, and the other 50% was locked on Uniswap in a liquidity pool with an Ether (ETH) pairing. ELON is currently trading at $0.00000070 and has posted over 220% gains in the last 14 days.

It doesn’t end there. There are many more projects that are trying to imitate the financial performance of Dogecoin — UnderDog (DOG), Doge Token (DOGET), DogeFi (DOGEFI), DogeSwap (DOGES), PAW Token and ShibaCorgi Token, to name a few. In fact, there is now even a CAT token, which was launched by Netflix show Tiger King star Carole Baskin.

Wujastyk further elaborated on the feasibility of these dog-themed meme tokens: “There are many coins popping up and simply riding the Dogecoin coattails. Most of these coins have no utility at all other than being a vehicle of speculation.” He further added: “These are mostly just coins riding the coattails of the current coin mania. Generally, this does not end well and many new traders will likely get burned.”

Since most of these dog-themed meme coins apart from DOGE are Ethereum-based ERC-20 standard tokens, the hype around them led to additional congestion on the Ethereum network and thus drove up the gas fees. Consequently, the price of dabbling into these coins has now increased substantially.

The blockchain is currently in the process of transitioning to Ethereum 2.0, which will see a proof-of-work consensus model replaced by a proof-of-stake consensus that aims to improve the scalability of the network and thus reduce gas fees for investors. But this process will take some time to conclude.

In the meantime, the general love for dogs and the desire to become quick millionaires like several DOGE investors are leading to meme coins flooding the market. But whether it is just a bubble or if there will be a paradigm shift in crypto due to these tokens remain to be seen. Most likely, Doge will pave the way for these coins and decide their future based on its own adoption and price action.