Shibarium, the long-awaited Ethereum Layer 2 from the team behind Shiba Inu (SHIB), a popular memecoin that was a star of the 2021 bull market, is off to a disastrous start after completing its mainnet launch on Aug. 16.

Shroom Daddy, a popular crypto influencer, shared screenshots appearing to show Shytoshi Kusama, Shiba Inu’s pseudonymous lead developer, confessing that all Ether bridged onto the network is currently unrecoverable.

The story was picked up by Beosin Alert, a blockchain security firm, which estimates $1.7M worth of bridged ETH is currently trapped. Beosin Alert added that transactions executed on Shibarium are currently “stuck in a pending state,” advising users to stop using the network until the issues are resolved.

The tumultuous Shibarium launch comes as an anti-climax for many SHIB investors, with the project promising to ascend above memecoin status with the Layer 2’s deployment for over a year.

Dog Coin Mania

SHIB enjoyed meteoric success as dog-themed tokens captured the imaginations of speculative degens with the spectacular rise of Dogecoin in 2021. With the fever having well and truly subsided by the time the 2022 bear market set in, the Shiba Inu project turned to Ethereum’s growing Layer 2 ecosystem to find new relevance.

Layer 2 networks bundle transactions together on a separate blockchain before submitting them to the Ethereum mainnet in batches for finalization, in order to reduce the costs associated with individual transactions. As such, Layer 2 networks inherit the security of Ethereum’s base layer while offering far lower transaction fees.

The buggy mainnet deployment follows months of testing, with Shibarium completing its beta launch in March. The SHIB team said 21M users engaged with the network during its beta launch phase.

Despite rallying 39% since mid-June, SHIB remains down 89% from its all-time high.

Proof of Participation

Shibarium uses a modified version of Proof of Stake consensus called Proof of Participation. Under PoP, validators are selected based on who has the largest holdings of a chosen asset. Prospective validators must lock up at least 10,000 BONE, the network token of Shibarium.

Shiba Inu has allocated 21M BONE to reward network validators and governance delegates.

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