Community members of derivatives protocol Synthetix have approved governance proposal SIP-2043, targeting its termination. SNX
+8.08%
The cessation of inflation will lead to the adoption of new strategies, including token buybacks and burns, which are scheduled to be implemented in the protocol’s future Andromeda software releases.
As a result, Synthetix stakers will no longer need to claim weekly inflation token rewards.
Inflation rewards were initially introduced to encourage liquidity and growth, but the core team noted that token inflation “becomes less effective as an incentive, leading to its termination.”
Going forward, the project plans to reduce the token supply by using transaction fees for redemption and burn and protocol creation fees to acquire and burn SNX tokens.
SNX token price | Source: The Block
After the latest development, the Synthetix token rose to a yearly high. According to The Block’s pricing page, it’s trading at $4.75, up 8% on the day. The token supply is approximately 328 million, with a fully diluted market capitalization of $1.5 billion.
Synthetix facilitates decentralized derivatives trading through liquidity pools that currently hold a total value of over $890 million on both the Ethereum and Optimism Layer 2 networks.
Disclaimer: The Block is an independent media outlet delivering news, research and data. As of November 2023, Foresight Ventures is a majority investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information about the cryptocurrency industry. Below are our current financial disclosures.
© 2023 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.