The DeFi project Synthetix community supported the proposal to improve the SIP 2043 protocol, which includes ending SNX inflation. The token reacted with growth.
$SNX Inflation? Not anymore. Synthetix Governance has slashed it to 0️⃣.
Get ready for a straightforward staking experience — No weekly claims for stakeholders, and non-stakers benefit from buyback and burn.
Inflation was transitory, but only for Synthetix.https://t.co/4eyNwcEsuv
— Synthetix ⚔️ (@synthetix_io) December 11, 2023
In a statement, the team noted that the increase in SNX market supply played a critical role in the influx of liquidity and growth of the protocol after 2019. However, over time, the effectiveness of inflation as an incentive for staking has declined.
The implementation of SIP 2043 involves updating the reward strategy for stakers and liquidity providers.
The deflationary model also opens the way for protocol-generated fees to be used to buy back and burn SNX. The developers plan to implement a mechanism for reducing the supply of assets in the upcoming Andromeda update.
As a result of the community’s decision, the price of SNX increased by about 8%. After the correction, the token is trading at around $4.7, according to CoinGecko.
Over the past 30 days, the asset’s quotes have increased by 67%, and over the year – 157%. At the time of writing, the SNX rate is 83.4% behind the all-time high ($28.53) recorded in February 2021.
Synthetix founder Kane Warwick submitted a proposal for community discussion to limit the issuance of a protocol governance token in August 2022.
In May, Warwick immediately put forward 12 initiatives that are aimed at bringing the project to the next stage of development.
Source: Cryptocurrency
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