Behind the rollercoaster-like price fluctuations of cryptocurrencies, there exists another class of coins that promises to offer price stability. Stablecoins attempt to bring in the best of both fiat, as well crypto, and over the past few years, they have gained massive traction, primarily because it is a major source of liquidity in the cryptocurrency market.
Unlike cryptocurrencies, the value of a stablecoin is pegged to a stable real-world asset that can range from commodities to fiat, held in reserve by the stablecoin issuer, bringing in centralization factor to the game. Meaning, there has to be a central authority holding and monitoring the backing of such crypto-assets.
This goes against the very ethos of cryptocurrencies. Along the same lines, Wiess Crypto Ratings’ latest tweet read,
“There’s a big problem with the 1st generation of #stablecoins: Users have to trust a central authority to hold sufficient dollar balances to back the coins they issued.”
Tether is unarguably the biggest stablecoin in the realm. Tether, with a market cap of $4.46 billion, holds a dominance of 11.7% over the entire cryptocurrency market. But in less than four years of its inception, USDT has garnered significant bad press. with numerous scandals and issues under its name.
Speculations alleging Tether manipulated Bitcoin’s price were the most damaging for the space. To top that, last years’ Bitfinex-Tether fiasco has only added to the woes.
Even policymakers are not a big fan of stablecoins, with numerous papers published on how this sector can threaten the monetary systems. Grant Baker, Chief Innovation Officer at STAE and author of the 2019 Blockchain Compliance Paper, was quoted as saying,
“While stablecoins provide shelter for cryptocurrency investors during times of turbulence, they haven’t seen much usage elsewhere. We anticipate this will change when Singapore begins issuing licenses and regulating stablecoin issuers this year. Decentralized stablecoins will likely be a very practical application of blockchain and that’s what we’re focusing on.”
However, even as the crypto-space continues to evolve, dethroning the largest stablecoin by market cap is be a tough job. Nevertheless, there is a growing breed of stablecoins that has made its presence known over the last couple of months.
The rise of crypto-collateralized stablecoins
The most appealing factor is the decentralized notion of this breed. While most popular stablecoins like USDT, USDC, PAX, Gemini Dollar are all fiat collateralized stablecoins, ie., backed by legal tender, crypto-collateralized stablecoins are trustless in nature. They are linked to the reserves of other cryptocurrencies.
Without a central authority, the most prominent decentralized stablecoin is DAI. This stablecoin uses smart contracts on the Ethereum blockchain to manage the collateral and maintain order. Another token that has gained traction is Synthetix [$sUSD] and it allows the creation of on-chain synthetic assets on the Ethereum blockchain.
Its advantages include transparency, accountability, and efficiency [in using due to the quick process of liquidation into other cryptos],
But, everything has its own pros and cons. A recent blog by DeFi Rate explained the drawback of this emerging class of stablecoins,
“Where fiat-backed stablecoins only need to hold 1:1 reserves in legal tender, this subset of stablecoins often require over-collateralization to account for price volatility. Most commonly, this ratio is set at 150%, meaning that in order to issue $100 worth of $DAI, you will need to post AT LEAST $150 worth of $ETH as collateral.”
There is also a high volatility factor. Additionally, there also may be chances of instant liquidation, meaning, the underlying crypto can be instantaneously liquidated if its price falls below a certain threshold, which is a risky affair for investors.
That being said, the growing trend depicts a more mature crypto-space, despite mounting regulatory threats from agencies across the world.
Synthetix’s algorithmic stablecoin sUSD has continued its month-long depeg, now trading nearly 21% below its $1 peg.
According to CoinGecko’s price data, sUSD has dropped to $0.7924 as of Apr. 17, down more than 8% in the past 24 hours. Its market cap has fallen from $30 million at the beginning of April to $25 million as of press time. Due to the ongoing depeg, market activity has increased, as shown by the 320% rise in 24-hour trading volume to $794,081.
sUSD is a synthetic asset issued on the Synthetix (SNX) protocol, backed by its native token SNX and designed to track the price of the U.S. dollar using Chainlink (LINK) oracles. However recent protocol changes have disrupted that stability.
The ongoing depeg started in March and deepened following the implementation of Synthetix Improvement Proposal 420, which aims to increase capital efficiency. SIP-420 introduced a protocol-owned staking pool, also known as the “420 Pool.” This new structure allows SNX holders to delegate their stake to a shared pool rather than manage their own debt positions.
SIP-420 also slashed the required collateralization ratio from 500% to 200%, making it easier to mint sUSD. This change has led to a sharp increase in sUSD supply without a corresponding increase in demand. Now, with some Curve (CRV) pools showing over 90% sUSD, the oversupply has caused the price to fall further.
The Synthetix team has acknowledged the issue, calling it a “transition period.” In a Discord statement, the team said it plans to enhance Curve pool incentives, extend the Infinex deposit campaign, and introduce new use cases like Snaxchain to absorb excess sUSD.
Still, DeFi analysts remain skeptical. “I don’t see who would want to underwrite the risk of holding $sUSD,” said one analyst in a post on X, pointing to the lack of a clear repeg strategy backed by treasury capital.
TLDRThe Root of the ProblemCurve Pools and Collateral ChangesSynthetix’s Response and Future Plans sUSD has fallen significantly below its $1 peg, trading as low as $0.66 before recovering to around $0.70-$0.80 The depegging began after the implementation of SIP-420, which reduced collateralization ratio from 500% to 200% Synthetix team says they have short, medium, and long-term plans to address the stability issues Market cap of sUSD has declined from $30 million to approximately $24.5 million Despite sUSD’s troubles, the SNX token has shown resilience, even gaining 7.5% in a 24-hour period Synthetix’s native stablecoin, sUSD, continues to drift further from its intended $1 peg, reaching all-time lows below $0.70. The crypto-collateralized stablecoin, which is backed by SNX tokens, has been experiencing instability since the beginning of 2025, with recent price action showing a concerning downward trend.
According to CoinMarketCap data, sUSD is currently trading around $0.70, representing a 30% deviation from its target peg with the US dollar. The stablecoin reportedly reached as low as $0.66 before showing a slight recovery. This decline marks a stark contrast to what users expect from a stablecoin, which is designed to maintain a stable value relative to its peg.
The depegging crisis began in mid-March 2025 and has progressively worsened over the past month. By April 9, the stablecoin had fallen to approximately $0.84, and it has continued its downward trajectory since then. The market capitalization of sUSD has also decreased from $30 million at the start of April to around $24.5 million at press time.
sUSD Price on CoinGecko The Root of the Problem The primary cause of sUSD’s instability appears to be linked to recent protocol changes, particularly the implementation of Synthetix Improvement Proposal 420 (SIP-420). This proposal was designed to enhance capital efficiency but has led to unintended consequences for the stablecoin’s stability.
SIP-420 introduced a new staking pool called the “420 Pool” and reduced the collateralization ratio from 500% to 200%. While this change was intended to improve efficiency, it has resulted in an oversupply of sUSD that has outpaced market demand.
The proposal also shifts debt risk from stakers to the protocol itself, creating what Synthetix describes as “structural shifts” in the ecosystem. These changes have removed the primary driver of sUSD buying, contributing to the current volatility.
Kain Warwick, founder of Synthetix, addressed the situation on April 2, explaining that the volatility is largely due to transitions in the protocol’s mechanisms. “New mechanisms are being introduced, but in this transition, there will be some volatility,” Warwick stated in a post on X.
Curve Pools and Collateral Changes The situation has been particularly evident in Curve pools, where sUSD now reportedly accounts for over 90% of the total supply. This imbalance has further contributed to the depreciation of the stablecoin as it struggles to maintain demand relative to other cryptocurrencies.
Warwick has also disclosed that Synthetix had divested 90% of its ETH position while increasing its SNX holdings. This adjustment in the protocol’s collateral composition may be having unexpected effects on investor perception of sUSD’s stability.
It’s worth noting that despite sUSD’s troubles, the SNX token has shown resilience. While SNX has fallen approximately 26% over the past 30 days amid the broader crypto market downturn, it has remained relatively stable in recent weeks, even gaining 7.5% in a 24-hour period according to one report.
⚓️The depegging of the stablecoin $sUSD has intensified, currently trading at $0.8030, Why?
According to market data, the depegging of $sUSD has worsened, with its current price at $0.803 — a 24-hour drop of 5.0%, bringing its market capitalization down to $25.46 million.$sUSD… pic.twitter.com/h3wC27MWcy
— Followin (@followin_io) April 17, 2025
Synthetix’s Response and Future Plans The Synthetix team has acknowledged the challenges facing sUSD but emphasizes that this isn’t the first time the asset has experienced stress. “Synthetix and sUSD have weathered multiple bear markets and periods of stablecoin volatility; this is not the first resilience test,” a spokesperson from Synthetix told Cointelegraph.
The team has outlined a three-tiered approach to address the current situation. In the short term, they will continue supporting liquidity for sUSD through Curve pools and deposit campaigns on their derivatives platform, Infinex.
For the medium term, Synthetix has introduced “simple debt-free” SNX staking that they say will “encourage individual debt repayment.” This measure aims to address some of the structural imbalances created by the protocol changes.
Long-term plans include making capital efficiency changes through the 420 Pool, taking over protocol-level management of sUSD supply, and introducing new “adoption-focused mechanisms” across Synthetix products.
Warwick has emphasized that “sUSD is not an algo stable, it is a pure crypto collateralized stable, the peg can and does drift, but there are mechanisms to push it back in line if it goes above or below the peg.”
The future of sUSD and the broader Synthetix ecosystem will depend on how effectively these measures can restore stability to the stablecoin. For now, users and investors are advised to monitor the situation closely as the protocol navigates this challenging transition period.
Synthetix's sUSD stablecoin has crashed below $0.70 marking its worst depeg in years as collateral changes backfire.
The algorithmic stablecoin sUSD, a cornerstone of the Synthetix ecosystem, has spiraled into its deepest depeg in years, tumbling below $0.7 amid mounting concerns over its collateral mechanism and liquidity crunch.
This latest drop marks a stark deterioration from its already fragile state earlier this month, when it wobbled near $0.83.
A System Under Stress Data from CoinGecko shows sUSD’s highest price in the last seven days at $0.9032. However, since April 14, it has dropped steadily, going to $0.86, then to $0.76, before finally hitting rock bottom on April 18 at $0.664.
At the time of writing, the stablecoin had regained nearly 2% of its value in the last hour, although the current price of $0.70 is still an 8.8% dip in 24 hours. Its performance across longer time frames is just as bad, down 29.3% over 30 days and 29.2% year-on-year.
The situation is no better with sUSD’s Optimism version. It hit a new all-time low of $0.6476 hours ago, after going down 6.9% in the past day and 32.7% over the previous month, raising fears of a potential death spiral reminiscent of Terra’s UST collapse.
Meanwhile, a modest 0.5% uptick in the price of Synthetix’s native SNX token has not stopped it from plummeting almost 26% in the last 30 days and 77% from its yearly high.
Cascading Risks sUSD is designed to maintain a 1:1 peg with the U.S. dollar and is backed by staked SNX tokens under a collateralized debt model. However, the recent passage of SIP 420, a protocol overhaul aimed at improving capital efficiency, seems to have inadvertently destabilized the stablecoin.
You may also like: UK Central Bank Eases Stablecoin Rules Following Market Response Coinbase Urges Congress to Treat Stablecoins Like Cash and Ease Crypto Tax Burdens Peter Schiff Blasts Jamie Dimon’s Push for Bank-Style Rules on Stablecoins The update slashed the collateralization ratio from 750% to 200% and transitioned to a collective debt pool, removing a key arbitrage mechanism: stakers can no longer profit from buying depegged sUSD to repay discounted debts.
It has seemingly resulted in a vacuum of buy-side demand. As Okto Chain’s Minal Thukral noted, the absence of a peg stability module has left sUSD vulnerable to sustained sell pressure, with liquidity thinning and concentrated AMM pools only exacerbating price swings.
The crypto community is divided on the issue. While some maintain that Synthetix’s treasury, which holds about $30 million in sUSD and other assets, could act as a backstop to stem the tide, others see little reason to hold sUSD without a clear repeg plan. Even Synthetix founder Kain Warwick seems to have embraced the dark humor of the moment, renaming his X account to “kain.depeg.”
Synthetix protocol’s sUSD stablecoin fell to a new low of $0.66 this week, over 30% below its intended $1 peg, extending a month-long depegging trend that has raised concerns about the protocol’s stability.
“It is worth pointing out that sUSD is not an algo stable, it is a pure crypto collateralised stable,” Synthetix founder Kain Warwick wrote in an April 2 tweet thread. “The peg can and does drift but there are mechanisms to push it back in line... These mechanisms are being transitioned right now, hence the drift.”
It is worth pointing out that sUSD is not an algo stable, it is a pure crypto collateralised stable, the peg can and does drift but there are mechanisms to push it back in line if it goes above or below the peg. These mechanism are being transitioned right now, hence the drift.
— kain.depeg (@kaiynne) April 2, 2025
In the same thread, Warwick tried to contextualize the situation by comparing sUSD’s volatility to other stablecoins like Tether’s USDT and MakerDAO’s DAI. “Here is sUSD, definitely much more volatile than both Tether and DAI, especially when you factor in the scale of the chart,” he said.
The volatility follows the implementation of the SIP-420 upgrade on March 7, a major update that restructured how debt is handled in the protocol.
The change moved from individual SNX stakers backing sUSD to a shared debt pool, slashing the collateralization ratio from 750% to 200%, a move that weakened key peg-support incentives.
On March 20, sUSD dropped to around $0.98, dropping to lows of $0.91 at the end of the month before continuing its downward trend through April, per data from CoinGecko.
“This new design improves capital efficiency but it broke an important stabilization mechanism,” Mrinal Thakur, modular blockchain Okto’s head of ecosystem, tweeted. “There is no longer a strong incentive for stakers to buy cheap sUSD and repay debts.”
“If enough fear builds, users rush to exit, creating more SNX sell pressure and feeding a cascading loop,” Thakur warned last week.
Thakur noted how the “liquidity is thin,” AMM pools are “heavily sUSD-weighted,” and “small moves cause outsized price swings.”
Meanwhile, Warwick said sUSD’s current instability is temporary, claiming that, “I’m actually not worried about Synthetix for the first time in years, which is why I have been buying SNX this year.”
Despite his optimism, he warned holders, “It would be horrible to get shaken out here. I’m not saying this is the bottom—it very likely will get worse before it gets better.”
Decrypt has reached out to Kain Warwick and will update this article should he respond.
sUSD’s instabilityThe sUSD stablecoin’s recent depegging follows persistent instability since the start of the year. It first dropped to $0.96 in January, struggled through February, and only briefly stabilized in March before diving again in April.
Following its crash to $0.66, the price of sUSD recovered to $0.83 on Friday, per CoinGecko data—but volatility remains high.
In the short term, Synthetix is bolstering liquidity through Curve pools and deposit incentives on its derivatives platform Infinex.
Medium-term fixes include “debt-free” staking to encourage individual debt repayment. Long-term, it plans to manage sUSD supply directly and add new adoption incentives across its product suite.
While the Synthetix treasury reportedly holds $30 million in sUSD and other reserve assets like USDC and OP, Thakur cautioned that the situation is “fragile.”
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April 18, 2025
The synthetic stablecoin sUSD, long pegged to the U.S. dollar and core to the Synthetix ecosystem, has dramatically lost its peg, falling as low as $0.68.
What initially appeared to be a minor deviation has since spiraled into a month-long crisis, exposing deep structural vulnerabilities and unsettling the broader DeFi community.
The root of the issue lies in the protocol’s transition to a new debt and collateralization mechanism under SIP-420, a change designed to improve capital efficiency that has inadvertently dismantled one of the key forces that previously helped maintain sUSD’s dollar parity.
Once reliant on a stabilization loop where SNX stakers would purchase depegged sUSD to repay debt at a discount, the system now offers no such incentive.
This change, combined with thin liquidity, falling SNX prices, and a lack of automated backstop mechanisms, has created a precarious environment.
sUSD Stablecoin: The Mechanics Behind the MeltdownCentral to sUSD’s depegging is the adoption of SIP-420, a sweeping change to how Synthetix handles staking, debt issuance, and collateral management.
Under the previous system, SNX holders who minted sUSD had an incentive to buy the stablecoin on the open market if its price fell below $1, allowing them to repay debt at a discount.
This arbitrage mechanism naturally supported the peg and maintained market stability.
SIP-420 changed all of that. It reduced the collateralization ratio from 750% to 200% and forgave old debts over 12 months, effectively removing the incentive to buy discounted sUSD to repay obligations.
Instead, stakers now lock their SNX for a year and watch their debt slowly dissolve, regardless of market conditions.
There are no natural buyers to support the peg, resulting in sustained selling pressure that has driven sUSD to shocking lows.
While the Synthetix treasury reportedly holds $30 million in sUSD, along with reserves in USDC and OP, these resources have yet to be actively deployed in defending the peg.
The lack of a Peg Stability Module (PSM) or arbitrage incentives currently leaves the system vulnerable.
Market Fallout and Efforts to Restore ConfidenceThe instability in sUSD is already affecting other protocols. Leveraged token issuers, such as Toros Finance, have begun withdrawing products from the Synthetix platform, citing unreliable performance due to the depegged stablecoin.
Urgent update regarding Synthetix based leverage tokens on Optimism
As mentioned earlier, the Optimism BTC leverage tokens where migrated out of Synthetix due to the sUSD price.
sUSD experienced a depegging event starting a month ago
1/7 pic.twitter.com/02FWM0PCTr
— Toros ♉︎ (@torosfinance) April 18, 2025 BTC leverage tokens on Optimism were the first to be migrated, followed by decisions to deprecate SUI, DOGE, and now SOL tokens, which were previously built on Synthetix.
These products, while technically still able to deliver leveraged exposure, saw their earnings undercut because gains are settled in the now devalued sUSD.
As sUSD strays further from $1, confidence across all Synthetix-based products declines. This could push even more users away, drying up liquidity and shrinking the network’s economic activity.
To restore trust, the Synthetix team has launched the “sUSD 420 Pool,” a new initiative offering 5 million SNX in rewards over 12 months for stakers who lock up sUSD in the pool.
🔔 The sUSD 420 Pool is launching with rewards starting in 36 hours 🔔
SNX stakers in the 420 Pool can deposit sUSD to earn a share of 5m SNX over 12 months – or 13,698.6 SNX daily
🧵 [1/5] pic.twitter.com/Xy5QUPthK9
— Synthetix ⚔️ (@synthetix_io) April 18, 2025 Early access is being provided to users through unofficial Discord channels and Reddit guides, where community members are helping each other migrate positions and stake SNX under the new system.
Participants must commit to a one-year lockup, with SNX rewards vested over three months following the end of the campaign.
These incentives may help absorb some of the excess sUSD in circulation and alleviate short-term selling pressure, but the broader issue remains.
Until a peg stability mechanism is implemented or debt repayment incentives are reintroduced, the sUSD peg is unlikely to recover organically.
Synthetix has launched a new liquidity initiative aimed at stabilizing its algorithmic stablecoin sUSD, which has been trading well below its intended $1 peg. The “sUSD 420 Pool,”
Announced by founder Kain Warwick on X, the pool will reward participants with 5 million SNX tokens over 12 months in an attempt to curb the effects of the ongoing depeg.
sUSD dropped to $0.8224 as of April 18, up over 7% in 24 hours, according to CoinGecko. It was trading as low as $0.63.
The decline has been linked to recent protocol changes under Synthetix Improvement Proposal 420, which introduced a protocol-owned staking pool and lowered the collateralization ratio for minting sUSD from 500% to 200%.
This change has caused a significant increase in sUSD supply, outpacing demand and leading to imbalances in decentralized exchange pools like Curve, where sUSD now makes up over 90% of some liquidity pairs.
Locked and staked SNX The new 420 Pool requires SNX stakers to lock their sUSD for a year to earn daily SNX rewards. Those rewards will also be locked and vest over three months after the campaign ends.
While official front-end support for the program launches next week, early access is available via Synthetix’s Discord.
Synthetix has called the current phase a “transition period” and plans to support sUSD through additional incentives and new use cases, including the upcoming Snaxchain initiative.
As sUSD continues to trade below its intended $1 peg, Synthetix founder Kain Warwick has urged stakers to step up and help restore stability before more stringent measures are implemented.
The depeg has stretched on for weeks, triggered by recent changes to how sUSD is issued and backed. While the team has already rolled out a new liquidity initiative to address the issue, the response so far hasn’t been enough to turn the tide.
In an April 21 thread on X, the Synthetix founder urged SNX stakers to take action through its new staking mechanism, warning that the current goodwill-driven approach may soon give way to tougher enforcement.
The new initiative, called the 420 Pool, offers SNX holders a chance to earn a share of 5 million SNX tokens by locking their sUSD for 12 months. Warwick is banking on this long-term commitment to help absorb excess supply and ease the sell pressure that’s been dragging sUSD away from its peg.
Warwick said the current process, which involves sending sUSD directly to a contract, is “extremely not ideal,” but suggested that once the user interface goes live in the coming days, staker participation will be closely watched.
If engagement remains low, he warned, the protocol may shift from incentives to enforcement.
“We tried nothing which didn’t work, now we have tried the carrot and it kind of worked but I’m reserving judgement. I think we all know how much I like the stick so if you think you will get away with not eating the carrot I’ve got some bad news for you,” Warwick said.
sUSD is an algorithmic stablecoin issued through the Synthetix protocol, backed by the platform’s native SNX token. Unlike fiat-collateralised stablecoins, sUSD maintains its peg using crypto-based collateral and price feeds from Chainlink oracles, making it more sensitive to changes in protocol mechanics.
The sUSD depeg can be traced back to a major protocol update, known as SIP-420. Introduced to boost capital efficiency, it slashed the collateral ratio for minting sUSD from 500% to 200% and moved to a shared, protocol-owned staking pool.
While SIP-420 made it easier to mint sUSD, it also flooded the market faster than demand could catch up, throwing off liquidity balances and pushing the stablecoin well below $1. At press time, it was trading at $0.7714 and was down 4.2% in the past 24 hours.
Warwick believes the solution lies in mobilizing existing capital within the ecosystem.
“The collective net worth of SNX stakers is like multiple billions the money to solve this is there we just need to dial in the incentives. We will start slow and iterate but I’m confident we will resolve this and get back to building perps on L1,” he added.
sUSD isn’t the first stablecoin to lose its peg. In March 2023, Circle’s USDC briefly fell to $0.87 after revealing that $3.3 billion of its reserves were tied up in the collapsed Silicon Valley Bank.
More recently, TUSD lost its peg to the U.S. dollar in January amid reports that its issuer failed to promptly release a collateral audit.
Key NotesSynthetix (SNX) has skyrocketed 7% in the past day, reaching a daily high of $0.6851.SNX has formed a falling wedge pattern on the daily chart, suggesting a breakout to $1.82.Overall, SNX is down more than 21% in the past week after the depeg of sUSD stablecoin. The price of Synthetix’s native token SNX Snx $0.22 24h volatility: 2.0% Market cap: $76.99 M Vol. 24h: $6.98 M experienced a significant surge of 7% in the last 24 hours, reaching a daily high of $0.6851. This upward movement was accompanied by an almost 40% spike in trading volume, indicating strong buying interest.
However, despite this recent rally, SNX is still down nearly 21% over the past 30 days, reflecting the uncertainty surrounding the protocol’s stablecoin, sUSD.
Technical Analysis Points to Potential Rebound SNX has formed a falling wedge pattern. If it breaks decisively above the upper trendline of the wedge with sufficient volume, it could signal a bullish reversal. The potential upside target for this pattern is in the vicinity of $1.82.
On the other hand, the MACD indicator shows the MACD line (blue) currently below the signal line (orange), indicating bearish momentum. However, the histogram is showing some lighter red bars, suggesting that the selling pressure might be decreasing.
A potential bullish crossover of the MACD line above the signal line would signal a shift in momentum and could support further upward movement.
SNX Price Chart | Source: TradingView
Moreover, applying Fibonacci retracement levels from the recent high around $0.86 down to the current low around $0.55 reveals key levels of resistance.
The recent 7% surge has seen SNX test the 0.236 Fibonacci retracement level around $0.67. If this level can be decisively broken and held, the next potential resistance targets would be the 0.382 level around $0.73 and the 0.5 Fibonacci level around $0.80.
However, the depeg of sUSD and the uncertainty surrounding its resolution could act as a significant headwind for SNX. Failure to address the stablecoin’s issues could lead to renewed selling pressure on SNX.
Depeg of sUSD and Synthetix Founder’s Ultimatum The price volatility in SNX coincides with the ongoing depeg of sUSD, which is currently trading at $0.7684, a 2.2% decrease in the last day and significantly below its intended $1 peg, shows CoinMarketCap data.
A recent protocol overhaul SIP 420 appeared to have inadvertently destabilized the stablecoin by removing a key arbitrage mechanism.
The absence of a peg stability module has left sUSD vulnerable to sustained sell pressure, with thin liquidity and concentrated automated market maker (AMM) pools exacerbating price fluctuations, as noted by Okto Chain’s Minal Thukral.
sUSD, the core stablecoin used across synthetix markets, is facing a serious and prolonged depeg.
what’s causing it, and is this just a bad patch or the start of a bigger breakdown?
quick breakdown:
sUSD is an algo-stable backed by staked SNX.
after sip 420, the minting model… pic.twitter.com/NONcLhAHEx
— Minal Thukral (@minal_thukral) April 18, 2025
In a bid to address the sUSD depeg, Synthetix founder Kain Warwick has taken a firm stance, urging SNX stakers to actively participate in a newly launched staking mechanism.
Update on the sUSD depeg. We have implemented an sUSD staking mechanism but it’s very manual until the UI goes live in a few days. Here was my hot take from discord though.
— kain.depeg (@kaiynne) April 21, 2025
The sUSD 420 Pool, introduced on April 18, incentivizes stakers to lock their sUSD for a year in exchange for a share of 5 million SNX tokens over 12 months.
🔔 The sUSD 420 Pool is launching with rewards starting in 36 hours 🔔
SNX stakers in the 420 Pool can deposit sUSD to earn a share of 5m SNX over 12 months – or 13,698.6 SNX daily
🧵 [1/5] pic.twitter.com/Xy5QUPthK9
— Synthetix ⚔️ (@synthetix_io) April 18, 2025
Warwick made it clear that if sufficient participation isn’t observed once the user interface goes live, he is prepared to exert “the stick” on stakers within the sUSD 420 pool to ensure the mechanism’s success.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
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A crypto journalist with over 5 years of experience in the industry, Parth has worked with major media outlets in the crypto and finance world, gathering experience and expertise in the space after surviving bear and bull markets over the years. Parth is also an author of 4 self-published books.
Community outrage forced Synthetix to scrap $27M Derive acquisition, with concerns including token dilution and the sUSD depeg
Synthetix has called off its proposed $27 million acquisition of crypto options platform Derive.
This decision was made after the initiative received strong criticism from both communities involved.
Public Backlash The proposed acquisition, first announced in a May 14 blog post, involved a token exchange at a rate of 1 SNX to 27 DRV. The plan was designed to combine Synthetix’s established market presence and on-chain expertise with Derive’s off-chain matching engine to build a leading decentralized derivatives platform.
However, the deal was subject to approval from both platforms’ communities, support that failed to materialize.
“Synthetix has withdrawn SIP-415, the proposal to acquire Derive after reviewing community and stakeholder feedback,” said the protocol in an update.
According to the team, the feedback revealed dissatisfaction with the token exchange terms and Derive’s valuation.
On the crypto options platform’s public forum, one user named “Ramjo” said the token exchange rate “poorly reflects the value of Derive,” calling it the “equivalent of selling the bottom.” Another community member, “AlvaroHK,” described the deal as a “terrible proposal” that wouldn’t benefit it at all.
They pointed out that Derive earns more revenue than Synthetix and warned about possible risks linked to the latter. This includes the recent depegging of its stablecoin sUSD, which fell to $0.68 in April, and its potential impact on the protocol’s treasury and token supply.
You may also like: Important Ripple (XRP) Deadline Concerning Many Users CZ Says AI Agents Could Drive Crypto’s Next Adoption Wave Analyst Predicts ‘Massive Bull Rally’ if US-Iran Peace Deal Is Signed In a follow-up, the user questioned why there was no mention of what would stop Synthetix from continuing to print more tokens, revealing that they found guidance showing plans to raise the SNX supply from 330 million to 500 million. They argued that this undisclosed detail would dilute the Derive offer by another 60%.
Battle for Dominance Derive started as part of Synthetix in 2021 under the name Lyra, but later rebranded and moved to operate independently. This included shifting away from using the sUSD stablecoin and liquidity.
If the re-acquisition had gone through, the company would have been issued with up to 29.3 million SNX tokens, with a lock-up period of three months followed by nine months of gradual release. However, with the token trading nearly 97% below its all-time high of $28.53 recorded in February 2021, the dilution risk and reduced value likely contributed to community hesitation.
Despite ending the proposal, Synthetix said it will continue to look for strategic opportunities to achieve its goal of building a top decentralized derivatives platform on the Ethereum mainnet.
This comes at a time of growing competition in the crypto derivatives space, with platforms like Binance, dYdX, and Hyperliquid all competing for dominance. Coinbase also recently announced a $2.9 billion deal to acquire Deribit, the largest digital asset options exchange.
Synthetix founder: sUSD is expected to fully return to its anchor at the end of the month
PANews reported on August 9th that Synthetix founder Kain posted on the X platform: "(The price) is coming back soon. This period has been difficult, but I am optimistic that it will fully return to the anchor by the end of the month, when the mainnet pre-deposit activity will be launched, and finally get us back on track." sUSD previously de-anchored due to Synthetix's introduction of a shared debt pool mechanism in SIP-420, falling to as low as $0.73.
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SNX price looks set for a deeper correction as technicals remain bearish for the asset, while its algorithmic stablecoin sUSD fails to maintain its peg to the U.S. dollar.
Summary
SNX price is down 10% over the past 7 days. Synthetix’s sUSD stablecoin lost its peg to the U.S. dollar. Price action has been confined within a descending parallel channel. According to data from crypto.news, Synthetix (SNX) was trading at $0.66, down 9.5% over the last 7 days and 70% under its year-to-date high.
The main reason why SNX has been in a downtrend is the ongoing crisis in its sUSD stablecoin.
The stablecoin has failed to maintain its peg to the U.S. dollar ever since it introduced changes to how sUSD is issued and backed under an improvement proposal in April 2025.
The stablecoin’s price fell as low as $0.73 shortly following the move. While it managed to recover to $0.97 over the next two months, the stablecoin’s price faced another major drop to $0.841 in July. At press time, sUSD was trading at $0.987, still short of its intended $1 peg.
sUSD’s failure to maintain its peg reflects a critical protocol weakness, which could continue to weigh on investor sentiment and dampen confidence in the broader Synthetix ecosystem.
Data from CoinGlass shows that open interest for SNX has dropped by 1% to $19.6 million, while the long/short ratio has fallen below 1. It reveals that a growing number of traders are positioned bearishly on SNX in the short term.
SNX price analysis SNX had been trading within a descending parallel channel for the past week on the 4-hour chart. A descending parallel channel is formed when an asset’s price forms lower highs and lower lows. This is considered a solid sign of bearish continuation.
SNX price has formed a descending parallel channel on the 4-hour chart — Sep. 5 | Source: crypto.news When adding the Moving Average Convergence Divergence indicator to the mix, it had also turned downward. As such, it is safe to say the momentum for now would most likely be bearish.
On top of this, the RSI was at 45, which places it within neutral-to-weak territory, which is another confirmation that the price may continue heading downwards from current levels.
Considering the above, SNX is likely to target the $0.60 support level, which marks a 10% drop from the current price level.
If this support fails to hold, it could open the door to further losses, with a potential retest of its August low of $0.54 possible.
Conversely, a breakout above the upper boundary of the descending channel would invalidate the bearish setup and could signal the beginning of a short-term trend reversal.
