Simple Summary

This SCCP proposes to remove SNX inflationary rewards paid on ETH shorts.

Abstract

Removing the inflationary rewards paid on ETH shorts will help boost the weekly snx inflation paid to minters and reduce wastage, as a the debt pool is currently negatively skewed in ETH following 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 is currently negative as a large portion of the minted sETH was swapped to stables. Therefore, it is possible to reduce the incentive paid on ETH shorts without taking on any risk of increasing the net ETH skew on the debt pool.

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