Shiba Inu's Copycats Are Thriving. Should You Buy It?

When celebrity impersonators are booked to entertain people at birthday parties, the celebrity's pay check doesn't change. Nonetheless, that's roughly the argument some people are making right now for buying Shiba Inu (CRYPTO: SHIB) as a spate of new Shiba Inu-themed meme coins have been surging in recent weeks on Ethereum and other chains.

One of the knockoffs even posted a reported seven-day gain of about 638,000% after Elon Musk seemingly agreed to a proposal to make it the mascot for his company SpaceX.

Some Shiba Inu holders are buying it once more, choosing to read the latest token flap as proof that the main brand is still valuable. But could that possibly be true, and does any of this mean that it's worth buying the original?

Image source: Getty Images.

The copycat rally never feeds back

Every SHIB-themed clone right now is a separate smart contract with its own liquidity pool. Dollars flowing into one token stay in that token's pool. There's no royalties being paid, no revenue sharing, and no financial bridge back to the original coin.

People sometimes point to the Shibarium's coin burn mechanism as a back door to the original Shiba Inu deriving some value from the copycats, but that doesn't really make any sense, either. The crypto's layer-2 network gets nothing at all from a knockoff's price pumping since the activity in question is happening on other networks, which never kick back any benefits or even data to the Shibarium because they aren't related at all, except by the name of the asset being similar.

What the clones actually capture is attention, and marginal capital from people who want to gamble on meme coins. And that attention, as well as the capital that comes with it, is almost always extremely fickle.

There's still no investment thesis for this coin

There is no reason to buy Shiba Inu or any of the newer tokens bearing its name.

The Shibarium, which was created with the idea of bolstering the coin's long-term thesis, is barely used. It has only $195,113 in total value locked in its decentralized finance (DeFi) contracts, down by 67% on April 21 alone. And the chain generated $0 in fees in the same period.

So, putting it gently, it seems like it would be a very tall order for the current level of activity on the Shibarium to ever burn enough SHIB to boost its price by even an iota.

Again, do not buy Shiba Inu, and do not buy its newer brethren; all of them are not worth the investment. If you want to get some crypto exposure for your portfolio, there are plenty of assets with real adoption that will do a better job with your money. On that front, buying some Ethereum is a perfectly good place to start.

Alex Carchidi has positions in Ethereum. The Motley Fool has positions in and recommends Ethereum. The Motley Fool has a disclosure policy.