{"id":210909,"date":"2023-12-12T11:44:48","date_gmt":"2023-12-12T06:14:48","guid":{"rendered":"https:\/\/dripp.zone\/news\/?p=210909"},"modified":"2023-12-12T11:44:48","modified_gmt":"2023-12-12T06:14:48","slug":"synthetix-tokenholders-vote-to-end-snx-inflation-crypto-news","status":"publish","type":"post","link":"https:\/\/dripp.zone\/news\/synthetix-tokenholders-vote-to-end-snx-inflation-crypto-news\/","title":{"rendered":"Synthetix Tokenholders Vote To End SNX Inflation &#8211; Crypto News"},"content":{"rendered":"<div>\n<p>The community for Synthetix, a veteran DeFi protocol credited with pioneering yield farming, has voted to put an end to SNX token inflation.<\/p>\n<p>On Oct. 11, SNX tokenholders passed the proposal <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/sips.synthetix.io\/sips\/sip-2043\/?ref=blog.synthetix.io\">SIP-2043<\/a>, ending the issuance of rewards in the form of newly-minted SNX tokens after Wednesday. Moving forward, Synthetix stakers will exclusively receive rewards in the form of trading fees, with the protocol set to introduce a buy-back and burn mechanism once its Andromeda upgrade is deployed on Base.<\/p>\n<p>\u201cThe effectiveness of inflation as an incentive has diminished over time,\u201d Synthetix <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/blog.synthetix.io\/the-end-of-synthetix-token-inflation\/\">said<\/a> in a blog post. \u201cSIP 2043 proposed ending SNX inflation, aligning with the protocol\u2019s new strategies, such as using trading fees for buy-backs and burns.\u201d<\/p>\n<p>The Synthetix team tipped that SNX\u2019s supply will become deflationary following the rollout of Andromeda. Half of the trading fees generated from Andromeda will be used to purchase and burn SNX tokens, with stakers receiving the other 50% of fees as rewards.<\/p>\n<p>Stakers can also access loans in the form of Synthetix\u2019s sUSD stablecoin against SNX collateral without paying interest or fees on the position. Synthetix noted users taking out said \u201cfree\u201d loans must still actively manage the position or <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/docs.synthetix.io\/staking\/staking-guide\/debt-hedging-strategies\">hedge<\/a> the associated debt.<\/p>\n<p>The news has driven up the price of trading volume of SNX, with the token gaining 31% over the past seven days to tag its highest level since May 2022, according to CoinGecko.<\/p>\n<h2>End of an era<\/h2>\n<p>The end of Synthetix\u2019s SNX rewards comprises a milestone in the evolution of DeFi, with many projects looking to do away with the aggressively inflationary rewards that propelled DeFi\u2019s growth throughout the last bull cycle in the search for more sustainable tokenomics.<\/p>\n<p>Synthetix was among the earliest DeFi protocols to use an inflationary rewards mechanism when it <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/blog.synthetix.io\/uniswap-seth-pool-incentives\/\">introduced<\/a> SNX incentives to bolster liquidity and adoption in 2019.<\/p>\n<p>Liquidity providers could initially earn SNX tokens by providing ETH and Synthetix\u2019s sETH token to a staking contract, with rewards later offered to users providing liquidity for stablecoins and other popular assets as well.<\/p>\n<p>The proposal said the incentives were \u201cincredibly effective\u201d in driving up liquidity and protocol adoption for Synthetix. However, tokenholders <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/sips.synthetix.io\/sips\/sip-202\/?ref=blog.synthetix.io\">voted<\/a> to significantly reduce SNX inflation last year, with Synthetix concluding that its current inflationary mechanism has little influence on the actions taken by stakers and liquidity providers.<\/p>\n<div class=\"relative flex items-center gap-2 rounded-md bg-[#191919] p-2 my-4 lg:hidden\">\n<div class=\"relative group  flex w-max items-center gap-2  p-2 text-sm text-white mx-auto\"><strong class=\"whitespace-nowrap w-min sm:w-auto bg-gradient-to-r from-[#9FF9D2] to-[#DB9FF9] bg-clip-text text-transparent\">DeFi Alpha<\/strong><span class=\"whitespace-nowrap  w-min sm:w-auto border-l border-white pl-1 lg:hidden\">Premium Content<\/span><\/p>\n<div class=\"tooltip font-heading shadow-cta absolute hidden lg:visible left-6 z-10 -top-[80px] w-max max-w-xs translate-y-full flex-col rounded-lg bg-[#EEEEF4] p-3 text-left text-xs text-black group-hover:flex lg:left-auto lg:right-4\">Looking for Alpha? Become a premium member of The Defiant and join our DeFi Alpha community.<\/p>\n<ul class=\"list-inside list-disc\">\n<li>DeFi Daily | Weekdays<\/li>\n<li>DeFi Alpha Letter | Weekly<\/li>\n<li>Defiant Podcast Transcript | Weekly<\/li>\n<li>Inbox Dump | Saturday<\/li>\n<li>Weekly Recap | Sunday<\/li>\n<\/ul>\n<\/div>\n<\/div>\n<p><a rel=\"nofollow noopener\" target=\"_blank\" href=\"http:\/\/thedefiant.io\/go-premium#pricing\" class=\"disabled:bg-cta-disabled-background disabled:text-cta-disabled-text rounded font-semibold border-cta-primary-border bg-cta-primary-background text-cta-primary-text hover:border-cta-primary-border-hover hover:bg-cta-primary-background-hover ml-auto block p-2 text-center text-sm !text-black !no-underline shadow-newButton\">Start for free<\/a><\/div>\n<p>\u201cIn recent years the effectiveness of this incentive has declined significantly,\u201d wrote <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.youtube.com\/watch?v=7g59sZyaPoA\">Kain Warwick<\/a>, Synthetix\u2019s founder and the author of SIP-2043. \u201cWith inflation now in low single digits, it does not meaningfully impact staker behavior.\u201d<\/p>\n<p>Warwick added that inflationary rewards would likely offset any SNX burned following the rollout of Andromeda. \u201cBy reducing inflation to zero, any non-zero fee yield on Base will result in the SNX token being deflationary,\u201d he said.<\/p>\n<p>The Synthetix protocol raked in roughly 28.5M from perp trading fees in 2023. \u201cThe initial inflation model was designed as a bridge to this kind of reward sustainability, now achievable without the need for inflationary incentives,\u201d Synthetix said.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>The community for Synthetix, a veteran DeFi protocol credited with pioneering yield farming, has voted to put an end to SNX token inflation. On Oct. 11, SNX tokenholders passed the proposal SIP-2043, ending the issuance of rewards in the form of newly-minted SNX tokens after Wednesday. Moving forward, Synthetix stakers will exclusively receive rewards in [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":210910,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[274,273,272,244,266,271,268,270,269,267],"class_list":["post-210909","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-de-fi","tag-crypto-finance","tag-decentralized-finance","tag-liquidity","tag-metamask","tag-pancake","tag-slippage","tag-sushiswap","tag-tronlink","tag-trust-wallet","tag-uniswap"],"_links":{"self":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/210909","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/comments?post=210909"}],"version-history":[{"count":1,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/210909\/revisions"}],"predecessor-version":[{"id":210911,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/posts\/210909\/revisions\/210911"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media\/210910"}],"wp:attachment":[{"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/media?parent=210909"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/categories?post=210909"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dripp.zone\/news\/wp-json\/wp\/v2\/tags?post=210909"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}