Shibarium | July 31, 2023
Shiba Inu is launching an EVM layer 2 called Shibarium in mid-august.
The pseudonymous head of the Shiba Inu project announced that Shibarium is likely to launch at the Blockchain Futurist Conference in Toronto which will be held from August 15-16.
“the event will feature the grand whitepaper, titled ‘Worldpaper,’ showcasing all Shib branded projects. It will also offer insights into the crypto’s ecosystem tokens, like SHIB, BONE, LEASH, TREAT, and Shi.”
While the EVM layer 2 space is getting crowded and competitive (Base, Optimism, Arbitrum, Polygon, etc), layer 2s are fetching high valuations and benefit from the upcoming EIP-4884, an Ethereum upgrade that will greatly reduce fees and improve through-put for layer 2s.
Additionally, some of the first assets to trade on the recently launched Coinbase layer 2 (Coinbase) were memecoins that rocketed to 8 figure valuations overnight.
It is likely that Shibarium becomes a popular environment for trading memecoins, at least for some period of time.
There are 3 way to potentially benefit from this launch.
- The first is to be long $SHIB as it should be the ultimate benefactor from the L2 launch, especially if it is used as a gas token.
The $SHIB chart looks quite bullish, thought like anything in this space, if the whole market crashes, expect $SHIB to crash too. $SHIB is breaking a >600 day down trend as it moves into this launch.
Ultimately, with 2 weeks to go until the launch, we believe there is asymmetric risk/reward to employing a buy the rumor, sell the news strategy here.
- The second way to potentially benefit from this launch of Shibarium is to buy the existing ecosystem tokens like SHIB, BONE, LEASH, TREAT, and Shi. We view this as higher risk as many of these are lower market cap tokens that may or may not benefit in the Shibarium ecosystem.
- The third way to play this launch is to wait for the launch of Shibarium and immediately buy any new memecoins that launch on the network with a shotgun approach. Recently, someone who purchased one of the first memecoins on Base ($BALD) turned a few dollars into nearly $2M overnight. They lost it all overnight as they didn’t taker profits and $BALD ended up being a rug pull. If you employ this strategy, be ready to take profits if the opportunity arises as you will likely lose money on most of the coins. This is obviously a high risk, high reward strategy.
Please note that generally it is not a strong strategy to have capital allocated to memecoins as they usually make large exponential jumps in price, then bleed out slowly for years, leaving most long-term holders underwater.
However, when memecoins break multi-year trend lines like SHIB just has, you should pay close attention (see DOGE):
Between the multi-year trend line break and the upcoming Shibarium catalyst, we believe $SHIB has potential for a large move.