The Synthetix community has approved the governance proposal SIP-2043, marking the end of inflation for its SNX token. This change is a significant shift in the protocol’s economic strategy, moving from inflationary measures to a model focused on token buybacks and burns.
The termination of SNX token inflation signals a new phase for Synthetix. The inflationary model was originally implemented to foster liquidity and growth within the platform.
However, the Synthetix team has observed a decrease in the effectiveness of this approach as a stimulus for the protocol.
In response, they are now setting their sights on using trading fees to fund the buyback and burn of SNX tokens. This strategy reduces the overall token supply, potentially increasing the value of the remaining tokens.
Synthetix operates liquidity pools with a total value exceeding $890 million. These pools are active on the Ethereum and Optimism Layer 2 networks, underlining the protocol’s broad reach in decentralized finance (DeFi).
This shift by Synthetix could have a lasting impact on its market position and is a development closely watched by investors and participants in the cryptocurrency and DeFi sectors.
