Shiba Inu, the meme coin determined to be the Dogecoin killer, may find favor with investors once more after Ethereum founder Vitalik Buterin burned over 410 trillion Shib tokens worth $6.7 billion.

The Ethereum co-founder recently received roughly 460 trillion Shib tokens from the Shiba Inu developers, believed to be part of their marketing campaign. However, Buterin decided to donate 10%, equivalent to 50 trillion Shib, worth $1.5 billion to Polygon’s COVID-19 relief fund in India. He burned the remaining 90%, equivalent to just over 410 trillion Shib coins worth $6.7 billion.  The process of burning the tokens involved sending them to a dead address.

“I’ve actually been impressed by how the dog token communities have treated the recent donations!” Buterin noted.

The Ethereum co-founder also noted that he was pleased by all the Shib holders showing support through donations meant to make the world a better place rather than focusing on profits. Vitalik also noted that he decided to burn the 90% remaining tokens because he felt that holding on to them would make him a locus of power. An interesting choice of words highlighting Shiba’s potential. His decision to burn the tokens is a good thing for the Shiba Inu community.

Why Vitalik’s decision to burn the Shiba Inu tokens is a step in the right direction

The creators of the Shiba Inu coins and platform made the tokens to be deflationary. Sounds somewhat intuitive considering the massive number of tokens that were made. However, a Bitcoin.org post published in July 2020 notes that the token will maintain a deflationary status by burning 1% of the Shib tokens in supply every day.

The deflationary rate is a big deal for the Shiba Inu community because almost half of the initial supply of Shib tokens is no longer in the market. The move drastically reduces the number of tokens available, thus accelerating the deflation by a considerable margin. A large amount of Shib tokens will be burned every year at 1% per day. In other words, the coin’s supply will reduce at an incredibly fast rate.

If the law of supply and demand continues to apply in Shiba’s case, its value should also continue to go up over time. Who knows how much it will be worth in two or three years, but lower supply supported by substantial demand is a recipe for gaining value. Perhaps this well-thought-out deflationary characteristic will prove helpful in transactions and wealth storage in the future, considering that the world is currently grappling with inflationary fiat currencies.

Shiba Inu’s bearish momentum was curtailed by news of the token burn by the Ethereum co-founder. The meme coin has since bounced back from Sunday’s low of $0.00001237 and is currently trading at $0.00001714. Its price is back above the 99-day moving average, and although it is still experiencing low volumes, the recent developments may pave the way for more upside.

Shib’s price surge roughly one week ago was courtesy of heavy speculation as people sought after the next big opportunity for gains from an undervalued digital coin. Unfortunately, there has also been a lot of selling, perhaps from the whales who purchased huge amounts of the token in its early days. The large amount of tokens in supply may also have severely hindered its gains.

In retrospect, launching the coin with a deflationary token with a huge amount of tokens seems to be a smart move that will deter speculation. Nevertheless, Shiba Inu might be a great investment especially for anyone willing to hodl over the long-term.