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.
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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.
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