New Proposal Sparks a Remarkable Surge in Synthetix Price, Reaching a 600-Day High

This week witnessed a significant surge in the Synthetix price, soaring to an impressive nearly 600-day high of $4.95.

New Proposal Sparks a Remarkable Surge in Synthetix Price, Reaching a 600-Day High

This upward momentum resulted in a breakout from a crucial horizontal resistance area, prompting speculation about the sustainability of this increase. Notably, Synthetix has entered a transformative phase following the approval and execution of SIP 2043, signaling the conclusion of SNX token inflation. This strategic decision stems from the diminishing efficacy of inflation as a staking incentive and underscores the protocol’s commitment to fostering a more sustainable economic model.

Introduced in 2019 to encourage staking and later adjusted in 2022 for dynamic targeting, SNX inflation employed a distinctive distribution approach among all healthy stakers. However, its implementation raised user confusion and concerns about the complexity of the inflationary model and staking process.

SIP 2043 represents a shift in staking incentives, as Synthetix opts to abandon inflation in favor of alternative strategies such as buybacks and burns funded by trading fees. Notably, the protocol has generated over 28.5 million in trading fees from its Perps at the time of this publication, demonstrating the viability of this new approach.

Following the move away from inflation, the staking process has undergone streamlining, eliminating the need for weekly claims. The new reward structure benefits both stakers and non-stakers alike. For stakers, the revised era introduces advantages such as a free loan against SNX collateral, automated fee burns, and a buyback and burn strategy aimed at reducing SNX supply. Non-staking token holders also reap rewards through a decrease in SNX supply, facilitated by the fees associated with the Andromeda Release.