Synthetix to end SNX token inflation, shift focus to buybacks and burns

Quick Take

  • Synthetix passed governance proposal SIP-2043 to end SNX token inflation.
  • New strategies, including token buybacks and burns, will be adopted.

The community members at derivatives protocol Synthetix have approved a governance proposal SIP-2043, aimed at terminating SNX +3.03% token inflation.

The cessation of inflation will lead to the adoption of new strategies, including token buybacks and burns, set to be implemented in the protocol’s forthcoming Andromeda software release.

Consequently, Synthetix stakers will no longer be required to claim weekly inflationary token rewards.

Initially, inflationary rewards were introduced to encourage liquidity and growth, but the core team noted that token inflation “became less effective as an incentive, leading to their termination.”

Moving forward, the project plans to use trading fees for buybacks and burns, reducing the token supply by using protocol-generated fees to acquire and burn SNX tokens.

THE SCOOP

Keep up with the latest news, trends, charts and views on crypto and DeFi with a new biweekly newsletter from The Block's Frank Chaparro

By signing-up you agree to our Terms of Service and Privacy Policy
By signing-up you agree to our Terms of Service and Privacy Policy

SNX token price | Source: The Block

After the latest development, the Synthetix token has rallied to its yearly high. It trades at $4.75, signifying an 8% increase for the day, according to The Block's price page. The token has a supply of about 328 million and a fully diluted market capitalization of $1.5 billion.

Synthetix facilitates decentralized derivatives trading through its liquidity pools, which currently hold a total value locked in excess of $890 million across both the Ethereum and the Optimism Layer 2 network.


Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.

© 2023 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

About Author

Vishal Chawla is The Block’s crypto ecosystems editor and has spent over six years covering tech protocols, cybersecurity, artificial intelligence and cloud computing. Vishal likes to delve deep into blockchain intricacies to ensure readers are well-informed about the continuously evolving crypto landscape. He is also a staunch advocate for rigorous security practices in the space. Before joining The Block, Vishal held positions at IDG ComputerWorld, CIO, and Crypto Briefing. He can be reached on Twitter at @vishal4c and via email at [email protected]

Editor

To contact the editor of this story:
Adam James at
[email protected]