June 4, 2023

Synthetix founder Kain Warwick submitted a proposal to shut down SNX’s high-yield returns and cap its supply at 300 million tokens.

According to Warwick, the just proposed Synthetix Improvement Proposal (SIP) will end the SNX inflation of 300 million tokens within ten weeks.

He continued that “inflation is designed to bootstrap the network, and it has done that” as the network now earns fees from atomic swaps. Hence the move to turn it off.

This SIP 276 proposal Titled “Shut down the money printing press” will limit the token supply and make any meta-governance decisions about the token supply. This means that future changes to SNX supply will require a unanimous decision by the Spartan committee.

Currently, the SNX supply is around 293 million. Therefore, there will still be ten additional fee periods where SNX will be minted and distributed before the supply reaches 300 million.

Synthetix’s revenue has grown significantly in recent months as protocols like Curve and 1inch use Synthetix for atomic swaps.

In June, Synthetix’s daily fees exceeded one million. While daily fees are now down, they still average over $150,000, and transaction volume on the network this month is currently over $1.2 billion.

While Warwick believes the proposal is likely to pass, some believe that its success could affect Synthetix.

Crypto analytics firm Delphi Digital said the protocol could struggle to maintain its user base and attract new users with organic revenue, especially if rivals offer higher yields.

SNX is trading at $2.73 after falling 14% in the past 24 hours, reflecting a general decline in the crypto market.

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