u.today
Synthetix (SNX), a decentralized liquidity provisioning protocol, is entering a new era with the recent release of Andromeda, an upgrade that has brought a deflationary mechanism to the protocol’s Perps V3 engine. According to the update shared on its official X account, following the release of Andromeda on Base Network, 40% of the Perps V3 Fees will be allocated to buying back and burning SNX through Yearn Finance-inspired contacts.
This deflationary push of Synthetix is hinged on the proper distribution of fees generated by the protocol through its multi-chain deployments. According to the hinted fee distribution breakdown on Base, 40% will be allocated to SNX buyback and burn, 20% will go to Perps Integrators, and USDC liquidity providers will get 40% of the remaining funds.
The buy-back-burn and Andromeda upgrade is part of SIP-345, which brings more than just the deflationary change to the Synthetix ecosystem. The liquidity provider has also expanded its collateral base with the addition of USDC on Base.
Synthetix's Andromeda Release: Embracing Buyback and Burn
— Synthetix ⚔️ (@synthetix_io) January 5, 2024
With the Andromeda Release on @base, 40% of Perps V3 fees will be allocated to buying back and burning $SNX tokens using @yearnfi-inspired contracts.
This strategy is designed to effectively distribute fees in… pic.twitter.com/KAQCc4er60
The goals of Synthetix with the release are multi-faceted, and besides enhancing the overall outlook of the protocol by shrinking the SNX supply, it also makes it more attractive for developers, traders and liquidity providers among other stakeholders.
Synthetix (SNX) price impact
Synthetix is one of the top DeFi protocols with intriguing price action that is set to benefit in the long term following this deflationary upgrade.
Riding on the basic laws of demand and supply, the potential drop in the supply of Synthetix and the likely surge in the accumulation of SNX may drive the price to new highs.
At the time of writing, Synthetix was trading at a price of $3.47, up by 2.47% in the past 24 hours, an impressive performance at a time when most altcoins are on the downtrend. The latest upgrade of Synthetix mimics related moves by the protocol in its bid to bolster its attractiveness ahead of the bull market cycle.