The crypto world is changing rapidly, and the word stable in stablecoins often faces many challenges. On April 10 , the stablecoin sUSD in the Synthetix ecosystem decoupled significantly, with the lowest price falling to $0.834 and now at $0.860, which is about 14% away from the $1 anchor value. This fluctuation quickly sparked heated discussions in the community, and many people worried that this was a signal of a new round of stablecoin crisis.
Mechanism upgrade leads to short-term de-anchoring
After the incident, Synthetix founder Kain Warwick explained the situation through the X platform and revealed that he had sold 90% of his ETH holdings and increased his position in SNX. Warwick said that the sUSD depegging was not a sign of a systemic crisis, but a temporary side effect caused by Synthetixs key mechanism upgrade.
This should be the second depegging event in the history of sUSD. The last time was on May 17, 2024 , but the reason was different. According to the analysis of Chaos Labs, a blockchain security agency, the main reason for the depegging last year may be that a large sBTC/wBTC liquidity provider suddenly withdrew its funds and sold a large amount of sUSD in the relevant Curve liquidity pool after obtaining sUSD through Synthetixs spot synthetic redemption mechanism.
For a long time, the anchoring of sUSD has relied on a complex debt management mechanism: users mint sUSD by staking the native token SNX, and the system maintains its 1:1 peg to the US dollar through high collateralization ratios and debt adjustments. With the adjustment of Synthetixs strategic direction, this old mechanism has been gradually removed and replaced by a more efficient and decentralized new system - the 420 Funding Pool under the SIP 420 proposal. The alternation of the old and new mechanisms inevitably brings transitional pains, and the short-term depegging of sUSD is a manifestation of this process.
Specifically, under the old mechanism, when the price of sUSD fell below $1, the pledger could make a profit by repurchasing sUSD at a discount and destroying the debt, which would naturally drive the price back up. However, with the abandonment of the old mechanism and the new mechanism not yet fully in place, the excess sUSD liquidity in the market temporarily lost its effective means of regulation, resulting in price pressure. Warwick emphasized that this volatility is only temporary, and with the completion of the deployment of the new debt management system, the long-term stability of sUSD will be significantly improved. Warwick repeatedly reiterated the collateralized stablecoin nature of sUSD, whose value is supported by crypto assets such as SNX, rather than relying on complex algorithms to regulate supply and demand, which is fundamentally different from the algorithmic stablecoin that once collapsed.
For SNX holders and sUSD users, the team has also developed a detailed plan for the transition period. Synthetix officials further supplemented the response measures through Discord, including strengthening the incentives of the Curve fund pool in the short term, extending the support period for Infinex deposit activities, and building a long-term price support system for sUSD.
The depegging of “antique stablecoin” has attracted attention. What has Synthetix been doing in recent years?
To further understand the current situation of sUSD, lets review the development history of stablecoins. The origin of stablecoins can be traced back to 2014, which witnessed the birth of the first stablecoins: Tethers USDT, BitShares bitUSD, and Nubits. Although bitUSD and Nubits failed to stand the test of time and faded out of history, USDT has survived to this day with its first-mover advantage and strong market adaptability, becoming the worlds most traded stablecoin. USDTs success was not all smooth sailing, and its price had a significant decoupling in 2017. But to this day, USDT still sits firmly in the top spot of stablecoins.
2018 is another key node in the development of stablecoins. This year, DeFi began to rise, giving rise to the emergence of many iconic stablecoins. MakerDAOs DAI, Synthetixs sUSD, and Terras UST have appeared one after another. At the same time, the CeFi field has also ushered in the second wave of stablecoins, including Circles USDC, TrueUSD (TUSD), Geminis GUSD, and Paxoss PAX. These projects have their own characteristics: DAI achieves decentralized anchoring through over-collateralized ETH, sUSD relies on SNXs high collateralization rate to support the synthetic asset ecosystem, and USDC uses redeemable fiat currency reserves as a selling point. During this period of history, different types of stablecoins have gradually differentiated into two main paths: collateralized and algorithmic. Collateralized stablecoins use physical assets as value support and are relatively stable, but are easily affected by the price fluctuations of collateral. Algorithmic stablecoins maintain their peg by adjusting supply and demand through smart contracts. Although this is theoretically more capital efficient, it is very easy to get out of control when the market fluctuates violently.
In 2021, DeFi projects generally recognized the strategic value of their own stablecoins, and many protocols began to vigorously develop the stablecoin ecosystem. However, Synthetix chose to gradually marginalize sUSD, which is undoubtedly a major mistake today. The SIP 420 proposal passed in early 2025 brought new opportunities for sUSD. The new mechanism introduced a collective funding pool model to reduce the collateral ratio to 200%, and planned to waive $62 million in historical debt within 12 months, significantly improving capital efficiency and system security. The old debt destruction mechanism failed, and the new stabilization module was not yet fully in place. This decoupling was caused by the transition period.
At present, competition in the stablecoin field is still fierce. Although sUSD is still the third long-lived stablecoin in the cryptocurrency field, its status is not as good as before, but its survival time (i.e. Lindy effect) has given it unique resilience. Todays mechanism adjustment may just be another upgrade on its evolutionary path.
In the short term, the price of sUSD may continue to fluctuate in the 5-10% discount range, but with sufficient reserves in the treasury, the possibility of a full collapse is low. In the long run, as the new mechanism is implemented, sUSD is expected to regain its foothold in the Synthetix ecosystem. The history of stablecoins tells us that the real strong ones are often the survivors who constantly adjust in the wind and rain.
