Most recent update: [March 3, 2022]
No securities regulatory authority has expressed an opinion about the Crypto Contracts or SHIB, made available on the VirgoCX Platform, including an opinion that SHIB is not itself a security and/or derivative.
What is SHIB?
Riding on the example made by fellow dog-faced altcoin Dogecoin, Shiba Inu (SHIB) is an Ethereum-based coin featuring the same breed of dog as the aforementioned DOGE. It is widely considered an alternative to DOGE, with some proponents of Shiba Inu touting it as the “Dogecoin killer.” Although the two coins were originally conceived as “meme” coins, with few technical qualities outside of their cute and fun appeal, Shiba has exploded in popularity in recent months, with SHIB’s price soaring tenfold during October 2021. At one point, it briefly surpassed its shiba-themed contemporary but, at the time of writing, Shiba Inu is sitting at 11th on CoinMarketCap’s cryptocurrency rankings.
Created anonymously in August 2020 by a person using the pseudonym “Ryoshi,” the coin quickly gained speed and value as the investing community was drawn in by the coin’s cute charm. Over the course of a year, it would make headlines from tweets and mentions by prominent figures in the industry, from Vitalik Buterin to even Elon Musk. Buterin donated over a billion dollars’ worth of SHIB to the Indian COVID-Crypto relief fund.
During its creation, Ryoshi introduced Shiba Inu with a “woof paper,” a humourous twist on a white paper, in which it outlines SHIB as a coin created by the community, for the community.
Shiba Inu has its own exchange, known as ShibaSwap, where it is listed along with its spin-off tokens LEASH and BONE.
Based off the Ethereum blockchain, SHIB is an ERC-20 token, contrary to the Scrypt-based DOGE. Ryoshi stated in the white paper that they chose to build Shiba off of Ethereum as it was secure. While the concept of the token is fairly basic and rudimentary compared to other Ethereum-based tokens, SHIB is unique in its execution and its active, loyal community. According to Ryoshi, the project was an experiment to answer the question: “what if a cryptocurrency project was 100% run by its community?” The aim to was test the power of what they called “collective decentralization,” leaving the fate of the coin to the hands of its users – much like Bitcoin.
The community, known as the ShibArmy, has over half a million members, all of whom embrace the project’s tenets:
- To start from zero and create something out of nothing
- Not being founded by a preassembled or existing team
- A professed love of Shiba Inu dogs
The Shiba Ecosystem
Expanding off the original Shiba Inu token, like we mentioned earlier, are a couple of other coins that belong to the SHIB ecosystem. Leash (LEASH) and Bone (BONE) are both spin-offs of SHIB. Shiba Inu, which originally started with 1 quadrillion tokens in circulation, sits on one end of the spectrum between the three; LEASH, the polar opposite, only has 108,000 tokens in circulation whilst BONE sits somewhere in the middle with 250,000,000 tokens.
In a fun little twist to the usual supply and incentive models of other tokens, Shiba Inu’s ShibaSwap platform plays on functions that were previously introduced by other cryptocurrencies. The tokens, besides being digital stores of value, are meant to be used on ShibaSwap for various canine-themed activities on the website. For example, users can “dig” to provide liquidity, “bury” to stake their tokens, and “fetch” tokens to exchange them for one or the other. BONE is mainly used as a governance token that allows holders to vote on Shiba Inu’s Doggy decentralized autonomous organization (DAO). LEASH, on the other hand, offers enticing rewards to liquidity providers.
Shiba Inu’s commitment to its community is evident with their Shiba Inu Incubator project, which is a collective of artists and other creatives around the globe to help move SHIB beyond ShibaSwap and towards the NFT space. These artists contributed to Shiba’s very own NFT collection, Shiboshis (likely a play on Satoshis), which feature 10,000 uniquely generated shiba inu-themed tokens.
Like other ERC-20 tokens, Shiba Inu is at the mercy of the Ethereum blockchain and its gas fees, which in recent months have been crippling for users. As of November 2021, SHIB is the 5th most called smart contract on Ethereum, and its newfound popularity has seen its network activity skyrocket. It is the 7th largest burner of gas on the blockchain, making activities surrounding SHIB and its related tokens costly if done regularly.
Of course, there is also the issue behind the coin itself: as Shiba Inu is largely dependent on its community rather than its technology, there is no real utility behind SHIB. Like Dogecoin, it was originally created as a fun experiment rather than to be a real contributor to the cryptocurrency technological space. Experts say that because of this, investing in SHIB is speculative as the reasons to hold the token in the long run are few and far between. SHIB has also been subject to an exponential boom in its price driven largely through media hype, making it even more risk-adverse than its other contemporaries.
Shiba Inu has been a collaborator with Amazon Smile (a charity) to collect donations to rescue actual shiba inu dogs with the Shiba Inu Rescue Association. Users can add on to their Amazon purchases to give a donation that goes to saving shiba inus in Southern California.
Prior to listing SHIB on the VirgoCX Platform, VirgoCX performed due diligence on SHIB and determined that SHIB is unlikely to be a security or derivative under Canadian securities legislation. VirgoCX’s analysis including reviewing publicly available information on the following:
- The creation, governance, and location of SHIB and/or its primary development team;
- The supply, demand, maturity and liquidity of SHIB; and
- Legal and regulatory risks associated with SHIB.
Statutory Rights under Securities Legislation
VirgoCX is offering Crypto Contracts on crypto assets in reliance on a prospectus exemption contained in the exemptive relief decision Re VirgoCX Inc. dated May 30, 2022 (the Decision). Please be aware that the statutory rights in section 130.1 of the Securities Act (Ontario), and, if applicable, similar statutory rights under the securities legislation of each other province and territory in Canada, do not apply in respect of the Crypto Fact Sheet to the extent a Crypto Contract is distributed under the prospectus relief in the Decision.
To learn more about Shiba Inu and its cute spin-off tokens, check these out:
Shiba Inu’s official website: https://www.shibatoken.com/
Shiba Inu on Investopedia: https://www.investopedia.com/shiba-inu-shib-5207903
Shiba Inu on CoinMarketCap: https://coinmarketcap.com/currencies/shiba-inu/
Shiba Inu on Coinbase: https://www.coinbase.com/price/shiba-inu