#CryptoMarketWatch

SHIB's Use Case: Shibarium TVL Reveals Structural Flaw

The SHIBUSD token is struggling to recover its price, a failure analysts attribute to fundamental structural challenges rather than simple market volatility.

This assessment follows new analysis indicating that SHIB's target of reaching $0.0001 is a "dead end" given the token's fundamental shortcomings.

Structural Challenge: Oversupply and Delayed Deflation

This grim perspective is supported by on-chain data: Total Locked Value (TVL) on the Layer-2 solution Shibarium has remained below $1 million since the beginning of October, revealing a lack of ecosystem utility and adoption.
SHIB faces a fundamental conflict between its massive circulating supply and the slow pace of its deflationary mechanism. The SHIB ecosystem is designed to burn tokens using the Layer-2 network Shibarium to reduce the total supply of approximately 589 trillion tokens.

However, the low TVL on Shibarium persists. This is only a fraction of the network's theoretical potential. Consequently, the token burn rate falls well short of market expectations. This stagnation suggests that development efforts are not translating into meaningful network activity or user adoption.
While SHIB's market capitalization is still in the billions, a TVL below $1 million is a striking indicator that decentralized applications and users are not adopting the chain at the necessary scale.

Analysts interpret this technical failure as the fundamental structural cause. They increasingly view ambitious price targets like 0.0001 as unrealistic. The sheer scale of the token supply requires substantial and sustained deflationary pressure that the current ecosystem cannot provide.
Utility Gap and Capital Flight: AI/DePIN

A secondary but critical factor driving SHIB's struggles is the rotation of capital within the cryptocurrency market. This capital is shifting to sectors that offer tangible benefits. As the broader Web3 trend shifts decisively from "meme" to "utility," SHIB is losing ground to projects that offer real-world value.

In the second half of 2025, capital has favored projects like AI computing and DePIN, which generate revenue from data, computation, and institutional efficiency. These utility-focused tokens offer clear fundamentals beyond speculation.
In contrast, SHIB is struggling to shed its "meme coin" image. Its lack of TVL confirms that Shibarium hasn't found a unique and compelling use case. This is necessary to attract developers and users from established Layer-2 networks.

The persistent utility gap is causing whales and smart money investors to divert capital from SHIB and into these higher-growth, utility-focused sectors.
Community Resilience and Competition

Despite long-term structural issues, community efforts are showing resilience. Data released yesterday shows that SHIB token burns have increased by more than 42,000% in the last 24 hours, with the price rising modestly to $0.00001062.

The capital flight isn't limited to utility tokens; it's also targeting alternative meme projects promising aggressive tokenomics. One prominent social media figure stated that "the smart ones are turning to Shib on Base," citing the 32.6% supply burn and "AI-driven utility" as key drivers.
This active competition highlights that investors are now seeking faster burn mechanisms and verifiable utility. This is forcing the original SHIB project to compete with AI tokens and newer, more aggressive meme coin models.

For SHIB to maintain its relevance and sustain its price recovery, its team urgently needs to demonstrate measurable and innovative utility. This requires more than just community excitement. Instead, it demands attracting significant liquidity and developer participation to Shibarium. This action ultimately proves the token's ability to function as a critical part of the Web3 infrastructure.

The recovery of Shibarium's TVL is the first necessary signal that SHIB can break free from its structural limitations.