Synthetix’s native token, SNX, is no longer inflationary following a successful SIP 2043 proposal which stopped the issuance of new tokens.
$SNX token holders have passed the proposal SIP-2043 to end the issuance of rewards in the form of newly-minted SNX tokens. In the future, Synthetix stakers will only receive rewards from trading fees, with the protocol set to introduce a buy-back and burn mechanism once its Andromeda upgrade is deployed on Base.
The rationale behind the proposal, published by Synthetix founder Kain Warwick, was that the effectiveness of inflation has diminished over time compared to the initial introduction which worked to incentivise liquidity and bootstrap the protocol. Additionally, the recently proposed buyback and burn experiments would be counter-intuitive if inflation continued.
The Synthetix team said that SNX will become deflationary following the rollout of Andromeda. Half of the trading fees generated from Andromeda will be used to purchase and burn SNX tokens, with stakers receiving the other 50% of fees as rewards.
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