Kain Warwick, the creator of Synthetix’s decentralized finance (DeFi) technology, has proposed a proposal that would stop excessively high yield returns for SNX stakers and set a 300 million token supply limit.
On the Ethereum and Optimism networks, traders can issue synthetic replicas of traditional financial assets, commodities, and native crypto assets using the Synthetix protocol.
Warwick stated in a Synthetix Improvement Proposal (SIP) dated August 25 that SNX reward inflation was initially meant to “bootstrap the network,” but he now believes it is unnecessary because atomic swaps may produce stable fee yields.
DeFi protocols 1inch and Curve began using the Synthetix platform to carry out atomic swaps, increasing traffic to the protocol, leading to a significant increase in fee revenue. In June, the protocol’s daily fees exceeded $1 million, which was four times what Bitcoin was bringing in.
The seven-day average charge for Synthetix, according to cryptofees, is currently $158,857, which is slightly less than the seven-day average fee for Bitcoin, which is $222,651.
All SUSD stablecoin fees paid by protocol users are distributed to stakers. Currently, the APY for stakers owing to SNX rewards plus SUSD fees is about 67%, but if it’s based purely on “actual return” on SUSD fees alone, this is likely to decline closer to 15%–20%.
Warwick, who is regarded as the “father of modern agriculture” for popularizing DeFi yield farming, stated in a tweet on Thursday that he thought “SIP-276: Turn off the money printer” had a “good chance” of passing after informal discussions. The suggestion will be formally presented the following week.
The current total supply of 293 million SNX tokens will be increased by ten periodic installments of 675,000 SNX tokens to reach the 300 million level before inflation is permanently stopped if SIP-276 is approved by the Synthetix governance community.
