Hassan Maishera
TL;DR
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The Synthetix governance proposal SIP-2043 has been approved by the network’s community.
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The proposal seeks to end the SNX token inflation and focus on buybacks and token burns.
Synthetic Community Ends SNX Inflation
The Synthetix protocol community members have approved a governance proposal SIP-2043 designed to terminate the SNX token inflation.
Ending the token’s inflation will result in the protocol adopting new strategies, including token buybacks and burns. The new strategies will be implemented in the protocol’s forthcoming Andromeda software release.
Thanks to this latest development, SNX stakers will no longer need to claim weekly inflationary token rewards. The Synthetix protocol initially launched inflationary rewards as a way to boost liquidity and growth. However, the development team have pointed out that the token inflation has become less effective as an incentive, leading to their termination.
The protocol now intends to use trading fees for buybacks and burns. This will ensure the reduction of the token supply, the team added.
The approval of this proposal saw SNX rally to a new 2023 high of $4.75 on Tuesday. However, it has since lost 18% of its value and is now trading at $4.04 per coin. Year-to-date, SNX has added more than 150% to its value.
Synthetic is a protocol that enables decentralized derivatives trading through its liquidity pools. At the moment, the protocol holds a total value locked in excess of $890 million across both the Ethereum and the Optimism Layer 2 network.
