Simple Summary

This SCCP proposes to decrease the SNX inflationary rewards paid on ETH shorts to 8k SNX per week from 16k SNX per week.

Abstract

Decreasing the inflationary rewards paid on ETH shorts will help boost the weekly snx inflation paid to minters and reduce wastage, as a substantially large portion of the skew is now being covered by the complete rollout of the wrapper contract.

Motivation

SNX inflation dedicated towards ETH shorts were being done because of the persistent skew on ETH, where the collateralization ratio of minters was largely driven by the movement of ETH price. Therefore, it was common practice to incentivize external stakeholders who would take on a short ETH position in order to assist minters in their debt management. However, with the introduction of wrapper, that ETH skew has materially declined as depicted in this chart. Therefore, it is possible to reduce the incentive paid on ETH shorts without taking on the risk of significantly increasing the net ETH skew on the debt pool.

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