Synthetix Plans to Stop SNX Inflation: Stakeholder Rights Restructuring, May Become a Deflationary Blue Chip Project

Recently, the Synthetix community is voting on a proposal to terminate SNX inflation. If this proposal is passed, it will mark the end of the Synthetix mining and inflation era, and SNX is expected to become a blue-chip token with no inflation and possibly even deflation.

According to Synthetix's governance mechanism, its core decision-making body, the Sparta Committee, is responsible for voting on improvement proposals and parameter adjustments. So far, 6 committee members have voted in favor of the proposal, with a support rate of 100%. The final voting is expected to conclude on December 18.

After this proposal is passed, the rights structure of SNX stakers will change. Previously, stakers could earn counterparty gains and losses, inflation rewards, and sUSD debt destroyed through transaction fees. In the future, their earnings will include counterparty gains and losses, sUSD debt destruction, and transaction fee income on the Base network.

It is worth noting that the returns for SNX stakers as liquidity providers are relatively stable. Data shows that the profit and loss (including trading fees and counterparty gains and losses) for stakers has been on an upward trend. In the most recent period, the annualized yield generated from inflation exceeded 10%, while the annualized yield from burning sUSD through fees surpassed 5%.

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

It is crucial for Synthetix to maintain a high stake rate for its operations. Whether it is synthetic assets or perpetual contracts, a sufficient scale of synthetic assets is needed for support. sUSD, as an "endogenous collateral stablecoin," requires a 500% collateral rate to ensure stability.

However, with Synthetix set to deploy the Andromeda version on the Base network, USDC will be used as collateral, which may reduce the reliance on sUSD and stakers while providing new sources of income for stakers.

Since its inception, Synthetix has adjusted its inflation strategy multiple times. From the initial high inflation to attract funds for staking, to gradually decreasing the inflation rate, and now proposing to completely stop inflation, it reflects the project's development stage and changes in the market environment.

Overall, this proposal to terminate inflation means a redistribution of rights between SNX stakers and regular token holders. Although staking rewards may decrease, stakers can still obtain stable income through counterparty gains and losses as well as transaction fees. At the same time, with the deployment of the new version on the Base network, the project is expected to open up new sources of income, injecting momentum into future development.