Synthetix Protocol SUSD Stablecoin This week it fell to a new low of $0.66, falling over 30% below the intended $1 PEG, extending the month’s decay trend that has sparked concerns about the stability of the protocol.
“It’s worth pointing out that SUSD is purely encrypted collateral stability rather than Argo’s stability,” wrote Kain Warwick, founder of Synthetix, in a tweet thread on April 2. “PEG can drift, but there is a mechanism to push it back into the column… these mechanisms are currently transitioning, so there is a drift.”
SUSD is purely encrypted collateral stability rather than algo stability, and PEG can drift, but there is a mechanism to push side-by-side when going above or below PEG. These mechanisms are currently in the process of transition, so they are drifting.
– Kain.Depeg (@kaiynne) April 2, 2025
In the same thread, Warwick tried to contextualize the situation by comparing SUSD volatility to other silly things like Tether’s USDT and Makerdao’s Dai. “It’s much more volatile than both the tether and the die, especially when considering the size of the chart.
This volatility follows the implementation of the SIP-420 upgrade on March 7th. This is a major update that restructures how debt is handled in the protocol.
The change moved individual SNX stakers in favour of SUSD into the shared debt pool, reducing the collateral ratio from 750% to 200%.
On March 20th, SUSD fell to about $0.98, falling to a low of $0.91 at the end of the month before continuing the downward trend for each Coingecko data until April.
“This new design improves capital efficiency, but has broken a key stabilization mechanism,” tweeted Mrinal Thakur, head of the ecosystem of the modular blockchain Okto. “There is no longer a strong incentive for stakers to buy cheap SUSD and pay off their debts.”
“If enough fear is built, users will hurry to the exit, creating more SNX sales pressure and supplying the cascade loop,” warned Thakur last week.
Thakur pointed out that “low fluidity” and that the AMM pool is “heavy and serious” and that “small movement causes large caliber shaking.”
Meanwhile, Warwick states that the current instability of SUSD is temporary, claiming, “I’m actually not worried about Synthetix for the first time in years, so I’m buying SNX this year.”
Despite his optimism, he told the holders, “It’s scary to shake up here. I’m not saying this is the bottom.
Decryption Contact Kain Warwick and update this article if he responds.
SUSD instability
The recent departure of SUSD Stablecoin follows persistent instability from the beginning of the year. It first fell to $0.96 in January, struggling until February, and temporarily stabilized in March before diving again in April.
After crashing to $0.66, the SUSD price was recovered to $0.83 on Friday for each Coingecko data, but the volatility remains high.
In the short term, Synthetix enhances liquidity through curve pools and deposits incentives for its derivative platform Infinex.
Medium-term revisions include “debt-free” staking to promote individual debt repayments. In the long term, we will directly manage SUSD supply and add new adoption incentives across our product suite.
Synthetix Treasury reportedly owns $30 million in SUSD and other reserve assets such as USDC and OP, but Thakur warned that the situation is “vulnerable.”
