SIP 24: Terminal SNX Inflation Source

AuthorVance Spencer, Deltatiger, Michael Anderson
Discussions-Tohttps://github.com/Synthetixio/SIPs/issues/36
StatusProposed
Created2019-10-25
Requires Inflation Smoothing (SIP-23)

Simple Summary

This proposal will add a perpetual weekly reward of 100,000 SNX starting on June 21, 2023, the 222nd week on the SNX inflation schedule.

This SIP is the formal spec successor of deltatiger’s Draft SIP Proposal #36, specifically pertaining to terminal inflation.

Abstract

  • Terminal inflation is an important mechanism to keep the SNX protocol stable in perpetuity
  • With the original inflation schedule, weekly inflation drops from 90.1K to 0 on March 13, 2024
  • With inflation smoothing as described in SIP # TBD, weekly inflation drops below 100K on June 21, 2023

Motivation

Perpetual weekly inflation serves as a mechanism to keep the protocol stable for the long term

Specification

Adjust SupplySchedule.sol to account for the following changes:

  • Starting on June 21, 2023, the weekly issuance of SNX tokens will adjust to 100,000.
  • This model will stay in place until it is stopped or adjusted.

With Inflation Smoothing and 100K Terminal Inflation: image

With Original Schedule and 100K Terminal Inflation image

Model

Rationale

Perpetual weekly inflation serves as a mechanism to avoid scenarios that would adversely impact the protocol like:

  • Minters packing up at the same time due to a lack of rewards
  • Synth supply shrinking
  • SNX unlocking to be sold down
  • SNX price dropping
  • sETH LPs getting their income halved and also now dropping in value
  • sETH LPs exiting by withdrawing and converting sETH to ETH
  • sETH getting smashed out of peg
  • Arb pool being unattractive as SNX drops relative to ETH

Test Cases

Standard test cases for Solidity contract compling and deploying onto Ethereum testnets before updating the contract on mainnet.

Implementation

  • Update and deploy SupplySchedule.sol to Ropsten, Rinkby, and Kovan
  • Update and deploy changes to proxy contracts that reference SupplySchedule.sol on Ethereum testnets
  • Update and deploy SupplySchedule.sol to Ethereum mainnet
  • Update and deploy changes to Ethereum mainnet proxy contracts that reference SupplySchedule.sol

Copyright and related rights waived via CC0.