sUSD Stablecoin Plummets to 5-Year Low
Synthetix USD (sUSD) Stablecoin Tanks to Five-Year Low
The Synthetix network's native stablecoin, sUSD, recently plummeted to its lowest value in five years, reaching $0.83 on April 10th. This continues a downward trend that began in early 2025, raising concerns about its long-term stability.
sUSD, a crypto-collateralized stablecoin, is pegged to the US dollar. Users lock up SNX tokens to mint sUSD, meaning its value is heavily reliant on the SNX token's market performance. This dependence has proven problematic, as fluctuations in SNX have directly impacted sUSD's peg.
A concerning parallel has been drawn between sUSD and the infamous TerraUSD (UST) collapse. Rob Schmitt, co-founder of Cork Protocol, highlighted the potential for a "death spiral" scenario. While acknowledging differences in collateralization and debt management, he warned that if SNX value falls significantly, sUSD's backing could be compromised, triggering a cascading sell-off.
Synthetix's Response and Mitigation Efforts
Synthetix maintains a $30 million treasury holding approximately half of the outstanding sUSD debt. This reserve is intended to act as a buffer against a potential death spiral by absorbing sell pressure. Synthetix founder Kain Warwick addressed the issue, stating that while past concerns about a death spiral were valid, the current situation is different. He attributes the recent volatility to a transition in sUSD buying mechanisms and assures that new systems are being implemented.
Warwick clarified that as a purely crypto-collateralized stablecoin, sUSD's peg can naturally drift. However, he emphasized the existence of mechanisms to correct deviations, stating that these mechanisms are currently undergoing a transition, explaining the recent instability.
Other Stablecoin Wobbles
sUSD isn't the only stablecoin experiencing difficulties. Synnax Stablecoin (syUSD) also recently deviated from its peg, dropping to $0.94 on April 7th, due to concentrated selling activity. The project is actively working on implementing a more robust redemption system.
Codeum: Your Partner in Blockchain Security
Building secure and reliable blockchain projects requires expertise. Codeum offers comprehensive solutions, including smart contract audits, KYC verification, custom smart contract and DApp development, tokenomics and security consultation, and partnerships with launchpads and crypto agencies. Contact us today to ensure the stability and security of your blockchain project.