Synthetix seeks to shut down the SNX Money Printer once and for all

Founder of decentralized finance (DeFi) protocol Synthetix, Kain Warwick, has submitted a proposal that would disable ultra-high yield yields for SNX stakers and cap the total supply of SNX tokens at 300 million.

The Synthetix protocol allows traders to issue synthetic versions of native crypto assets, traditional financial assets, and commodities on the Ethereum and Optimism networks.

In an August 25 Synthetix Improvement Proposal (SIP), Warwick explained that SNX reward inflation was originally intended to “prime the network”, however, he believes this is no longer necessary as they can generate sustainable fee returns from atomic swaps.

A surge in fee revenue was the result of DeFi 1inch and Curve protocols starting to use the Synthetix platform to perform atomic swaps, bringing more traffic to the protocol. In June, the protocol surpassed $1 million in daily fees, four times the amount Bitcoin was earning.

According to cryptofees, Synthetix is ​​currently taking a seven-day average of $158,857 in fees, which is a bit below Bitcoin’s seven-day average of $222,651.

Stakeholders receive all SUSD stablecoin fees from protocol users. Currently, the APY for bettors due to SNX rewards and SUSD fees is around 67%, but it is likely to approach 15%-20% if based entirely on the “actual return” of only SUSD fee.

In a Twitter post on Thursday, Warwick — also known as the “Father of Modern Agriculture” for popularizing DeFi yield farming — revealed that he believes from informal discussions that “SIP-276: turn off the ticket printer” had a “decent chance” of being passed. A formal presentation of the proposal is scheduled for next week.

If SIP-276 is adopted by the Synthetix governance community, ten periodic installments of 675,000 SNX tokens will be added to the current total supply of 293 million tokens to reach the 300 million mark, before ending the inflation indefinitely.

Twitter user “Synthaman” found the news particularly upbeat, stating that “#SNX is on the verge of becoming a scarce commodity with inflation going to ZERO…” while others aren’t so sure. what SIP-276 would mean for the long-term protocol.

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Delphi Digital analysis firm tweeted that with Synthetix soon ending the issuance of SNX tokens, the protocol faced the challenge of maintaining its current user base and “attracting new users with organic revenue in a market where yield is abundant “.

It remains to be seen whether decentralized finance (DeFi) protocols like Synthetix can attract enough punters relying solely on fee revenue or how the end of SNX inflation may impact the price of the SNX token. which is currently at $3.04, up 10.5% over the past week.

Warwick also noted that a formal presentation on SIP-276 will take place next week, which will be fed into Synthetix’s governance process if passed.