Perhaps the most popular meme token in the market, Shiba Inu (SHIB-USD) is once again in focus for investors today. At the time of writing, SHIB has sunk 4% over the past 24 hours. This comes on news that Crypto.com will be dropping support for this dog-inspired currency in its Crypto Earn rewards program.
Crypto.com’s Crypto Earn program provides investors looking to hold a variety of tokens with yield in exchange for locking up their tokens. This platform offers yield on an impressive assortment of cryptocurrencies, which are not widely available on other exchanges. The ability for investors to earn yield has undoubtedly driven a significant amount of volume to Crypto.com.
However, with market conditions deteriorating, it appears Crypto.com is managing its risk by delisting some of the higher-beta tokens on its platform. Shiba Inu and meme token Dogecoin (DOGE-USD) were delisted, while Near Protocol (NEAR-USD), Zilliqa (ZIL-USD) and Fantom (FTM-USD) were added.
Unsurprisingly, various Shiba Inu community members have spoken out about this decision on social media. The ShibArmy doesn’t like this move. Fair enough.
With that said, let’s dive into what investors should make of this news.
Shiba Inu Moves Lower on Removal From Yield Program
Following the recent fallout from crypto lender Celsius (CEL-USD), other yield-generating platforms have begun to rethink their liquidity models. In this case, it appears the decision to remove otherwise speculative tokens is one that’s been made from a risk-management perspective. Should liquidity dry up, the threat to Crypto.com’s overall business from mass withdrawals via retail investors could spell trouble. Indeed, getting in front of any potential issues is something investors ought to cheer.
The rise of yield farming and the payout of high yields on assets that don’t generate cash flows certainly seems like a difficult business, especially when token prices are dropping. In a rising price environment, everyone makes money. However, as we’ve seen, these sorts of rewards programs can end painfully.
While the Shiba Inu community is upset about this move, it’s probably for the best. Having well-functioning exchanges where investors can buy or sell tokens is important. In this case, it appears this move was a necessary one, at least until the next bull market begins.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
