On April 18, 2025, the stablecoin sUSD from Synthetix crashed below $0.7, reaching a five-year low of $0.664, according to CoinGecko. This is the deepest depeg in recent years, caused by changes in the protocol following the implementation of proposal SIP-420. This reform reduced the collateralization level from 750% to 200% and transferred the debt to a collective pool, eliminating the arbitration mechanism that previously incentivized stakers to buy sUSD at a discounted price to repay debts.
Synthetix founder Kain Warwick called this a temporary phenomenon related to the transition to a new system. However, the lack of a peg stabilization module and the excess of sUSD in Curve liquidity pools (over 90%) have intensified the price pressure. Analysts, including Minal Thukral from Okto Chain, point to the lack of demand as a key issue. While Synthetix's treasury of $30 million may provide support, the community is losing trust, and traders face a dilemma: to exit or wait for a recovery.
Synthetix plans new incentives and integrations, but a quick return to $1 is not expected. The situation highlights the risks of decentralized stablecoins during periods of transformation.
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