Shibarium to burn 5-20T SHIB a month. Does it matter?

I still find cryptocurrency interesting. It is a fun outlet for some basic math fun. 

I also find the way people think and look at the topic to be interesting. If you follow SHIB news, you've undoubtedly seen the rumours that Shibarium will burn 5-20T SHIB per month. And while this would be a much higher, much more reliable burn rate than the current burn rates... does it actually mean anything?

It isn't really possible to say for sure how the market will react. But, we can look at it purely from the perspective of burn rate vs supply and market cap. And that is actually pretty simple. Basically, for what a real-world impact *SHOULD* look like (and no, things never actually end up looking as they should in any sort of investment, especially in crypto), we can assume that the market cap has no reason to grow simply because supply decreases.

And, since we're trying to control for variables to simplify our calculations we will also assume that the burn rate is better expressed as a percentage of the total supply. This actually makes sense, which is another reason to do it this way. 

To explain that; Assume you have:

• A token with just 10 coins in circulation and a market cap of $10. 
• If the burn rate starts at 1 token, then it removes $1 worth of tokens from circulation. 
• But, this should not impact the value of the eco-system as a whole so the remaining 9 tokens become worth $1.11 repeating (which is $10/9). 
• To maintain the same burn rate of $1 per cycle, the actual number of tokens needed to burn is less now. 0.9 tokens are needed. 
• And this is what a stable burn rate would look like for a token like SHIB as well.

In the case of SHIB, if 240T are burned in the first year and this is 40% of the supply, then only 144T will need to be burned the next year to maintain the same growth. And then 86.4T the next year and so on. Obviously, burning 240T indefinitely is not just unlikely, it is impossible. We'll run out of tokens eventually.

At the time of writing this, Google tells me that there are about 590T SHIB in circulation. and 5-20T a month is 60-240T/year. That means that IF these numbers pan out, Shibarium will burn between 10-40% of SHIB's circulating tokens each year. I can't say I'm that optimistic so while I'm not even speculating it is possible, I'm still going to cut those numbers a bit and say 5-25% burn rates are what they REALLY think is likely and the 10-40% is just nice marketing.

And, even handicapped, that would be pretty impressive. Especially for any investment made prior to the launch of Shibarium. Anything held before it went live would realize those gains in a compounding fashion. It is also a rate which is likely to stay ahead of inflation even on the lower end. And on the upper limits it would become a pretty insane way to grow your money. 

It would not make most SHIB holders rich over night. Decreasing supply by 25% in a year is better than most investments you can make. But, it would only turn a $100 investment into $125 one after a full year and $156 after 2 years. 25 years makes it up to $26K (which is nothing to laugh at for a $100 initial investment with no ongoing investment). And while the advertised max of 40% would be even better, even that wouldn't make it into a magical money printing machine.

Sending SHIB to $1 or even $0.01 in a short period through burns alone would require a burn rate of almost 100%. But I don't mean 90% or even 99%. I mean more like 99.99999%. We need to start shaving of multiple orders of magnitude to get it there. At a market cap of $4B according to google, to get to $1/SHIB the number of SHIB available needs to drop to... 4B SHIB.  Which is around 5 orders of magnitude smaller than the current supply.

If Shibarium started performing this well, supply would like NOT be the only factor that plays into the price. But, there are competing forces on either side of that argument so I won't speculate. What I will say is this; IF Shiabrium can burn ANYTHING in that range from the lowest 5% all the way up to 40%, AND it can do it consistently AND nothing happens to affect its market cap... it becomes an incredible investment opportunity.

While I said that I don't want to guess on other factors, I will break that for one piece of additional speculation. I don't think it is sustainable even if it does happen to start out as advertised. The reason? Exactly because it would be a good investment. That would draw more people to buy and hold the token slowing the burn rate. It might give the token a small bump early on, and it may help keep the burns at a higher rate than they are today. But, the gravy train runs out once people start flocking to in larger numbers.