Synthetix founder proposes limiting SNX issuance to 300 million
The founder of the DeFi platform Synthetix, Kain Warwick, has brought to the community a proposal to fix a cap on the SNX governance token at 300 million coins.
— kain.eth (✨🔴_🔴✨) (@kaiynne) August 25, 2022
In Warwick’s view, the inflationary model proved effective during the protocol’s launch.
“Now that the project is earning significant and growing revenue from atomic swaps and perpetual derivatives, it’s time to wind down inflation,” he noted.
Warwick recalled that a 2019 decision set the token issuance to end after four years; at a fixed inflation rate of 2%, the total supply would have been 250 million SNX.
However subsequent governance decisions altered these parameters, and the protocol is expected to approach the 300 million SNX total supply within a few weeks.
“On one hand, inflation redistributes ownership of the network among those who participate in staking, but at the same time it reduces fee revenue, expressed in dollars over time. The problem is that this creates a persistent downward pressure on the price of SNX,” Warwick explained.
He added that grounding the supply at 300 million tokens would guarantee higher dollar-denominated fee revenue.
“Besides, the 300 meme is too good to pass up,” he concluded.
The total supply of SNX stands at 293.25 million tokens. Under Warwick’s plan, issuance would continue for ten more cycles at 674,873 SNX per week until the cap is reached.
He voiced optimism about the chances of his idea gaining traction as the discussion opened. Officially, the Synthetix Improvement Proposal (SIP) the protocol’s founder plans to submit next week.
According to DeFi Llama, the platform’s TVL stands at $522 million. The protocol ranks 25th by this metric. TVL
At the time of writing, SNX trades around $3.3. Over the last 24 hours the token has risen by nearly 9% (CoinGecko). The coin’s price peak was $28.53 in February 2021.
As ForkLog noted in educational cards, ForkLog explains what governance tokens are, how to obtain them and what they are used for.
Read ForkLog’s bitcoin news in our Telegram — news on cryptocurrencies, prices and analysis.
Рассылки ForkLog: держите руку на пульсе биткоин-индустрии!