DeFi platform Synthetix to discontinue usage of SNX protocol

Kain Warwick, founder, Synthetix, a decentralised finance (DeFi) protocol, has given a proposal of turning off high yield returns for SNX stakers and capitalise the total SNX token supply at 300 million, as stated by Cointelegraph. 

According to Cointelegraph, the Synthetix protocol gives traders rights to issue synthetic modes of cryptocurrency native tokens, traditional financial assets, and commodities on the Ethereum and Optimism networks. In an August 25 Synthetix Improvement Proposal (SIP), Warwick emphasised on how SNX’s reward inflation was initially designed to bootstrap the network. However, he feels that it is no longer needed as they have the ability to generate fee yields from atomic swaps. Due to usage of the Synthetix platform to conduct atomic swaps by DeFi protocols 1inch and Curve, there has been a rise in fee revenue which brought in more traffic to the protocol. In June, the protocol crossed one million dollars in daily fees, which was four times the amount being made by Bitcoin. As per cryptofees, Synthetix is taking a seven-day average of $158,857 in fees, lower than Bitcoin’s seven-day average of $222,651.

On the basis of information by Cointelegraph, stakers get all the SUSD from users of the protocol. Recently, the APX for stalkers due to SNX rewards and SUSD fees stood at 67%, which is expected to fall closer to 15-20% if the assumptions are based on yield from SUSD fees only. Through a Twitter post, Warwick unveiled that there is a decent chance for SIP-276 to be passed following discussions. If SIP-276 gets approved by Synthetix governance community, then ten periodic installments of 675,000 SNX tokens will get added to the overall supply of 293 million tokens for it to reach the 300 million mark before inflation’s end.

Moreover, Cointelegraph noted that analyst firm Delphi Digital gave out a tweet that while Synthetix prohibited the issuance of SNX tokens, the protocol faced obstacles to maintain its current user base and to attract new users. 

(With insights from Cointelegraph)

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