Synthetix proposal may end inflation: SNX stakers' rights restructuring, project moves towards a new phase

Recently, the Synthetix community is voting on a key proposal that aims to end the inflation of SNX. If passed, it would mark the end of the era of Synthetix mining and inflation, and SNX could also transform into an inflation-free or even deflationary token.

According to the current voting situation, the proposal has received overwhelming support and is likely to pass by the end of the voting on December 18. Once effective, starting from December 21, users will no longer be able to claim inflation rewards.

At the heart of this proposal is a rebalancing of the interests of SNX stakers and ordinary token holders. Until then, SNX stakers can earn trading fee rewards and SNX's inflation rewards. If the proposal passes, the staker's income will mainly come from the profit and loss as a counterparty, the sUSD debt burned through fees, and the transaction fee income on the Base network.

Data shows that the returns for SNX stakers have consistently increased. In the most recent period (November 30 - December 6), the annualized yield from inflation exceeded 10%, while the annualized yield from the destruction of sUSD through transaction fees surpassed 5%.

The background of the proposal includes the significant reduction in the current inflation rate and the upcoming launch of Synthetix v3 on the Base network, which will bring new sources of revenue. Another proposal currently being voted on suggests using half of the fees generated on the Base network for the repurchase and destruction of SNX, while the other half is allocated to liquidity providers.

For ordinary SNX holders, if the proposal passes, they will no longer be subject to price pressure from inflation. Especially if the buyback proposal is also approved, SNX may enter a deflationary phase.

! Synthetix Proposes to End Inflation: SNX Staker Staking Reshaping, or into a Deflationary Blue Chip Project

Synthetix's operating model relies on maintaining a high staking rate. As an endogenous collateralized stablecoin, sUSD requires a collateral ratio of 500% to maintain stability. The more SNX you stake, the more synthetic assets you can mint, which is essential to support perpetual contract trading.

However, as the new version of Synthetix on the Base network is about to use USDC as collateral, the importance of sUSD may decrease, which may also reduce Synthetix's reliance on SNX stakers.

Since its inception, Synthetix has undergone multiple inflation adjustments. From the initial high inflation to attract funds for staking, to gradually reducing the inflation rate, and now possibly ending inflation completely, this reflects the project's development strategy and changes in the market environment.

Overall, this proposal represents an important step for Synthetix as it moves into a new phase. It not only redefines the rights distribution for stakers and holders but also reflects the project's ability to adapt to market changes and technological advancements. With the launch of the Base network version and the potential introduction of a deflationary mechanism, Synthetix is laying the groundwork for future development.

! Synthetix Proposal to End Inflation: SNX Staker Staking Reshaping, or into a Deflationary Blue Chip Project