Synthetix May End Inflation: SNX Stakeholders' Rights Restructuring, Project May Shift to Deflationary

Recently, the Synthetix community is voting on an important proposal aimed at ending the inflation of SNX tokens. If this proposal is passed, it will mark the end of the Synthetix mining and inflation era, and SNX may become a high-quality token with no inflation or even deflation.

According to Synthetix's governance structure, it includes several committees and groups elected by SNX stakers every four months. Among them, the Spartan Council (SC) is the core governance body of the system, responsible for voting on improvement proposals and parameter changes.

As of the morning of December 11, 6 out of 8 members of the Spartan Committee have voted on the proposal, achieving a support rate of 100%. This means that the proposal is very likely to pass. The final voting will end on December 18. It is worth noting that starting from December 21, the proposal will take effect, and users will no longer be able to receive inflation rewards.

If this proposal is passed, it will have a significant impact on the interests of SNX stakers and regular token holders. In the Synthetix protocol, SNX stakers act as the counterparties for synthetic asset and perpetual contract trading. On this basis, they can earn trading fee rewards and inflation rewards in SNX.

If the proposal is approved, the rights of SNX stakers will include: profits and losses as the counterparty of traders, sUSD debt destroyed through trading fees, and transaction fee revenue on the Base chain. Compared to other perpetual contract projects, the income of SNX stakers as liquidity providers is more stable. Data shows that the profits and losses of SNX stakers (including trading fees and profits and losses as the counterparty of traders) have been on an upward trend.

For ordinary holders of SNX, this proposal will increase their rights, as the downward price pressure caused by inflation will disappear. If another proposal, SIP-345, is also passed, SNX may even enter a deflationary era.

Synthetix has undergone multiple inflation adjustments throughout its history. It is considered one of the earliest projects to initiate liquidity mining, and gradually reducing inflation was part of its early plans. Since 2019, Synthetix has experienced several inflation adjustments, reducing from an initially high inflation rate to an inflation rate of 2.5% in August 2023.

The proposal to end inflation means a redistribution of rights between SNX stakers and regular token holders. The proposal is likely to pass, which will result in the disappearance of inflation incentives for SNX staking, but the rights of regular token holders will no longer be continuously weakened by inflation.

With the upcoming deployment of Synthetix's Andromeda version on the Base chain, USDC will be used as collateral, which may reduce the reliance on sUSD and stakers, while providing new income sources for stakers. This change could reshape the project's economic model and open new avenues for the future development of Synthetix.