According to a report by “The Block,” the community members of decentralized derivatives trading protocol Synthetix have approved governance proposal SIP-2043, with over half of the Spartan Council members agreeing. The proposal aims to end the inflation of Synthetix’s native token, SNX.
With the cessation of token inflation, Synthetix will adopt new strategies, including token buybacks and burns. These strategies will be implemented in the upcoming Andromeda version of the protocol. As a result, Synthetix stakers will no longer need to claim weekly inflation rewards in SNX, and transaction fees will be automatically burned.
The initial introduction of inflation rewards was intended to incentivize liquidity and growth, but the core team has pointed out that the effectiveness of token inflation as an incentive measure has gradually diminished, ultimately leading to the discontinuation of this mechanism. Synthetix plans to use transaction fees for token buybacks and burns, reducing the token supply by acquiring and burning SNX tokens through fees generated by the protocol.
Following these recent developments, SNX has surged to a yearly high, with a trading price of approximately $4.64 at the time of writing, marking a growth of over 20% in the past week.
Synthetix facilitates decentralized derivatives trading through its liquidity pools, and its total value locked (TVL) on the Ethereum and Optimism chains currently exceeds $890 million.
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