Synthetix Founder Urges Stakers to Act as sUSD Depeg Persists

Want to know more about Synthetix Founder Urges Stakers to Act as sUSD Depeg Persists? Synthetix’s algorithmic stablecoin, sUSD, has experienced a significant depeg from its intended $1 value, dropping to lows of $0.66 in April 2025. This instability has prompted Synthetix founder Kain Warwick to call upon SNX stakers to engage with new mechanisms designed to restore the peg.​

The Depeg: Timeline and Causes

The depeg began in late March 2025, with sUSD falling below $0.92 on March 31. By April 18, it had reached a low of $0.66, marking a 34% decline from its peg. As of April 21, sUSD is trading around $0.77.

Key Factors:

SIP-420 Protocol Update: Introduced changes that shifted debt risk from individual stakers to the protocol, reducing personal incentives to maintain the peg. ​

Loss of Incentives: The new model removed motivations for stakers to buy discounted sUSD and repay debts, weakening the mechanisms that previously supported the peg.​

Synthetix Founder Response

sUSD 420 Pool Launch: To combat the depeg, Synthetix launched the sUSD 420 Pool on April 18. This initiative allows SNX stakers to deposit sUSD and earn a share of 5 million SNX over 12 months. Deposited sUSD is locked for a year, with rewards unlocking three months after the event ends. ​

Manual Staking Mechanism: A manual staking mechanism has been introduced to address the depeg, with a full user interface expected soon. Warwick emphasized that if participation is insufficient, stricter measures may be implemented. ​

Market Impact

sUSD Price: As of April 21, sUSD is trading at approximately $0.77, down from its $1 peg. ​

Market Cap: The market capitalization of sUSD has decreased, reflecting reduced confidence and liquidity.​

Read more: Crypto Titans Collide | Cross Border Crypto Fraud Exposed | Bitcoin Price Analysis

Trading Volume: The depeg event led to a 300% surge in sUSD/USD trading volume within an hour on April 18, indicating heightened market activity and volatility. ​

The sUSD depeg highlights the challenges algorithmic stablecoins face in maintaining stability, especially amid protocol changes. Synthetix’s proactive measures, including the sUSD 420 Pool and manual staking mechanisms, aim to restore confidence and the peg. The coming weeks will be crucial in determining the effectiveness of these initiatives and the resilience of sUSD.