Synthetix token rises after inflation halt

The DeFi project Synthetix community backed the protocol improvement proposal SIP 2043, which envisions ending SNX inflation. The token moved higher.

$SNX Inflation? Not anymore. Synthetix Governance has slashed it to 0️⃣.

Get ready for a straightforward staking experience — No weekly claims for stakers, 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

The team said in a statement that the rise in SNX’s circulating supply played a key role in attracting liquidity and in the protocol’s growth since 2019. However, over time inflation’s effectiveness as an incentive for staking declined.

The implementation of SIP 2043 envisages updating reward strategy for stakers and liquidity providers.

The deflationary model also opens the way to using fees generated by the protocol for the buyback and burning of SNX. Developers plan to implement the mechanism to reduce the asset’s supply in the upcoming Andromeda update.

Against the backdrop of the community decision, SNX’s price rose by about 8%. After a pullback, the token trades at around $4.7, according to CoinGecko.

Over the last 30 days the asset’s quotes rose 67%, and over the year — 157%. The SNX price, down 83.4% from its February 2021 all-time high of $28.53, was around that level at the time of writing.

The founder Kane Warwick brought to the community for discussion a proposal to cap the supply of the protocol’s governance token in August 2022.

In May, Warwick unveiled twelve initiatives aimed at taking the project to the next stage of development.