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Shibaswap explained: What is Shibaswap and how does it work?

shibaswap-explained-what-is-shibaswap-and-how-does-it-work
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Shibaswap explained: What is Shibaswap and how does it work?

Shiba Inu (SHIB) has cemented its place as one of the top meme coins in the crypto markets, making massive gains in 2021. The team behind the dog-themed coin built ShibaSwap to expand the meme coin’s ecosystem to make Shiba Inu more than just a copy of Dogecoin. 

In this guide, you will learn what ShibaSwap is, how it works, and how you can make money with it. 

What is ShibaSwap?

ShibaSwap

ShibaSwap is a decentralized crypto exchange (DEX) that allows you to trade on a peer-to-peer basis. This means you can swap tokens directly on ShibaSwap without the need for a counterparty, which is usually considered more private and secure than trading your crypto assets on centralized exchanges (CEXs).

The Shiba Inu whitepaper states, 

“The goal of ShibaSwap is to provide a safe place to trade your valuable crypto while remaining decentralized. We will constantly scale this ecosystem so it may bring ever-increasing interested parties to the ShibaSwap platform.” 

ShibaSwap provides many of the functions you will find in a modern DEX, such as swapping of tokens, liquidity pools, governance, staking, yield farming, and an NFT marketplace. 

Fueling ShibaSwap is Shiba Inu’s native utility token SHIB, as well as two other ERC-20 tokens: Bone ShibaSwap (BONE) and Doge Killer (LEASH). 

ShibaSwap was launched in July 2021 and is built on top of the Ethereum network. On ShibaSwap, you can trade ERC-20 tokens, stablecoins, and a dozen more tokens. You can also task your assets using a range of functions to earn passive income in cryptocurrency. 

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How does ShibaSwap work?

To understand how ShibaSwap works, we must first look at the three main flagship tokens of the DEX.

SHIB token

As stated earlier, SHIB is the native token of the Shiba Inu ecosystem. SHIB was the first token to be listed and incentivized on ShibaSwap. 

However, it is SHIB’s two sibling tokens that anchor the DEX. 

BONE token

Bone ShibaSwap (BONE) is designed to serve as the ShibaSwap governance token. The token allows holders to vote on upcoming proposals and changes to the ShibaSwap protocol through its “Doggy DAO,” which is the Shiba Inu decentralized autonomous organization (DAO). The more BONE tokens you possess, the greater your voting power. The total supply of BONE is fixed at 250 million tokens.

LEASH token

The other token underpinning the DEX is Doge Killer (LEASH). The token was originally launched as a rebase token where LEASH leveraged the price of Dogecoin (DOGE) to keep accruing value. In other words, LEASH prices were controlled by an algorithm that adjusted the supply of LEASH to track the price of DOGE at a rate of 1 to 1,000. 

For instance, if the value of DOGE was $0.06, the supply of Doge Killer would change to fix the price of LEASH to $60. 

LEASH no longer tracks the price of DOGE but rather acts as the main store of value for ShibaSwap investors. According to the project, the token has a limited supply of 107,647 tokens. 

Having said that, ShibaSwap offers several functions that incorporate the three native tokens. 

The first is the “DIG” function, the liquidity pool function on ShibaSwap. Using this function, you can deposit asset pairs to existing liquidity pools on the DEX. This ensures the platform has enough assets to execute transactions. 

In return, you will earn rewards in the form of ShibaSwap liquidity pool (SSLP) tokens. These tokens allow you to receive free BONE tokens upon redemption. 

Shibaswap explained: What is Shibaswap and how does it work? - 1

“BURY” is a function that enables you to stake your SHIB, BONE, and LEASH to generate yield in the form of BONE tokens. The bury function lets you stake your SHIB, BONE, LEASH, and receive tokens representing their staked amount in xSHIB, xBONE, and xLEASH.

Shibaswap explained: What is Shibaswap and how does it work? - 2

When burying SHIB you are entitled to 3% of BONE minted with each new block of data. In addition, xSHIB distributes a net percentage of all ETH transaction fees on the DEX, with part of the fees being converted into SHIB tokens.

Burying LEASH yields 1% of BONE minted per block. You also get to the net a percentage of all ETH transaction fees, which are converted to LEASH. 

Finally, burying BONE earns you 1% of BONE minted per block as well as a portion of the fee converted to BONE. This sort of yield farming is beneficial to those looking to increase their voting power. 

Notably, 33% of staking rewards in the form of BONE can be withdrawn immediately, while to access the remaining 67%, you must wait six months. 

“WOOFING” is the function for redeeming BONE returns by swapping the SSLP tokens on the DEX. 

Shibaswap explained: What is Shibaswap and how does it work? - 3

The “SWAP” feature allows you to exchange multiple assets on the ShibaSwap platform. 

Shibaswap explained: What is Shibaswap and how does it work? - 4

ShibaSwap also offers quite a secure trading environment. According to CertiK, a blockchain security service, the DEX has a safety score of 93/100. The platform has resolved over 90% of issues that were raised during its security audit in 2021. 

How to start trading with ShibaSwap

To begin using the ShibaSwap platform, you will have to connect a compatible crypto wallet. 

The three compatible options listed by the platform include Metamask, Coinbase Wallet, and WalletConnect. Wallet Connect allows you to connect web3-enabled mobile apps to connect to ShibaSwap. 

Once you have connected your wallet by signing the transaction to connect, you can start exploring the ShibSwap ecosystem.

Remember, you will need to top up your wallet with an amount of ETH that can cover gas fees and convert it into SHIB, LEASH, and BONE tokens if you plan to begin staking or providing liquidity. 

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

FAQs

What’s the difference between Shiba Inu and ShibaSwap?

Shiba Inu is a meme coin inspired by the leading meme-based cryptocurrency Dogecoin. ShibaSwap, on the other hand, is a decentralized exchange that allows users to trade digital tokens on a peer-to-peer basis without a central counterparty matching buyers and sellers.

Is it safe to use ShibaSwap?

According to the leading smart contract auditing firm CertiK, ShibaSwap has a security score of 93 out of 100. Out of the 34 issues highlighted by the security audit, ShibaSwap’s developers reportedly addressed 97%.

Is ShibaSwap real?

Yes. ShibaSwap is the Shiba Inu project’s native decentralized trading venue.

Is ShibaSwap legit?

While no platform can be completely risk-free, ShibaSwap is generally considered to be a legitimate and secure decentralized exchange.