Synthetix USD stablecoin loses dollar peg, drops to 5-year low of $0.83.

Cork Protocol co-founder Rob Schmitt said the stablecoin’s design shares similarities with Terra’s UST but has a “more manageable” debt governance system.

The Synthetix protocol’s native stablecoin, Synthetix USD (sUSD), fell to its lowest value in five years, extending a months-long struggle to maintain its $1 peg.

The asset has faced persistent instability since the start of 2025. On Jan. 1, sUSD dropped to $0.96 and only rebounded to $0.99 in early February. Prices continued to fluctuate through February before stabilizing in March.

On April 10, sUSD fell to a five-year low of $0.83.

SUSD is a crypto-collateralized stablecoin. Users lock up SNX tokens to mint sUSD, making its stability highly dependent on the market value of SNX.

Synthetix USD’s “death spiral” risks

When the sUSD token dropped to $0.91 on April 1, Rob Schmitt, the co-founder of the risk tokenization platform Cork Protocol, explained the potential “death spiral scenario” of the stablecoin. 

Schmitt said the stablecoin’s design shares similarities with Terra’s TerraUSD (UST) stablecoin, which collapsed in 2022. While he noted key differences in collateralization and debt management, Schmitt said the fundamental risk remains.

Despite the concern, Schmitt emphasized that such a collapse is unlikely due to Synthetix’s $30 million treasury, which holds about half of the outstanding sUSD debt. He said this reserve could be deployed against a spiral scenario.

“The biggest factor why sUSD won’t death spiral is because the Synthetix treasury hodls about $30 million of sUSD, which is about half the outstanding debt. To avoid a death spiral, this sUSD can be unwound,” Schmitt wrote. 

Synthetix founder Kain Warwick previously responded to the dips, saying that while he had feared a death spiral during the last seven years, he sleeps “great” these days.