Synthetix stablecoin sUSD has fallen 6% in the last day to trade at $0.8597, continuing the recent decline below its $1 peg.
At the same time, 24-hour trading volume has jumped nearly 487% to over $2.1 million, as per CoinGecko data. This reflects growing market activity as concerns rise. Synthetix (SNX) is a decentralized finance protocol that lets users create and trade synthetic assets, which track the value of real-world assets on-chain.
With the help of oracle data, its stablecoin, sUSD, is designed to mirror the price of the US dollar and is backed by the platform’s native token, SNX. The recent drop in sUSD’s price comes after the launch of SIP-420, a new proposal that introduced the “420 Pool.”
This pool allows SNX holders to mint more sUSD with less collateral, lowering the limit to 200% instead of the previous 500%. Analysts claim that the main reason the stablecoin is falling from its peg is because of the sharp rise in the supply of sUSD, brought about by the lowered collateral requirement.
Panterafi, a DeFi analyst, noted in an Apr. 2 post on X that the excess supply and yield farming tactics that involve selling sUSD are putting pressure on the price. Although sUSD is still overcollateralized, its peg now depends more on market dynamics than direct arbitrage or traditional debt repayment methods.
Since I'm into it as well here is a short recap of the $sUSD depeg
Before : 500% collateral needed to mint sUSD
Less collateral for as much mint = higher supply
— ✧Panterafi (@panterafii) April 1, 2025
Synthetix developers have described this as a “transitionary period.” In its Discord, the team said it plans to boost incentives for liquidity pools and expand utility for sUSD through initiatives like Snaxchain.
“During this transition there is excess sUSD in the market causing pressure on the price of sUSD (which is still healthily over-collateralised). We will continue to work on managing (increasing in the short term) incentives for curve pools, supporting the Infinex deposit campaign (will extend) and creating additional sinks for sUSD that will provide long term price support (snaxchain coming)”
— Synthetix’s Discord statement
This isn’t the first time sUSD has slipped below its peg. Core contributors reassured users of continued efforts to restore stability following similar incidents in March and May of 2024.
While some believe that the problem is manageable others, like DeFi analyst Eldar, caution that the current model might not be able to sustain the peg in the long run without a clearer material value backing SNX.
However, Kain Warwick, the founder of Synthetix, is still hopeful. He recently added more SNX to his holdings and stated that the current depeg is a short-term mechanism in SIP-420 implementation.
