On April 18, the price of the sUSD stablecoin from the DeFi synthetic asset platform Synthetix plummeted to a local low of around $0.68. At the time of writing, the coin had recovered to $0.73.
The asset has repeatedly lost its peg to the dollar throughout its existence. In March 2020, the price of sUSD fell to $0.43.
The issuance of the “synthetic stablecoin” is backed by SNX tokens locked in staking.
A Synthetix representative told Cointelegraph that the volatility experienced by the stablecoin since the beginning of the year is linked to the implementation of SIP-420. The proposal shifted debt risks from stakers to the protocol itself.
According to Okto’s Growth Director Minal Thukral, the introduction of the new structure increased capital efficiency but dismantled an important stabilization mechanism for sUSD.
sUSD, the core stablecoin used across synthetix markets, is facing a serious and prolonged depeg.
what’s causing it, and is this just a bad patch or the start of a bigger breakdown?
quick breakdown:
sUSD is an algo-stable backed by staked SNX.
after sip 420, the minting model… pic.twitter.com/NONcLhAHEx— Minal Thukral (@minal_thukral) April 18, 2025
The SIP-420 system reduced the collateral ratio from 450% to 200% and introduced a 12-month delay for old debts. Stakers lost the incentive to repay them and buy cheap stablecoins, the expert noted.
This, he explained, led to selling pressure. Thukral believes the main risk for sUSD lies in its SNX-backed structure—if the token’s price falls, the collateral diminishes. As market panic grows, users rush to exit the asset, causing a cascading effect.
The expert noted that the Synthetix team has capital in other coins like USDC and OP, which can be used to maintain sUSD’s stability, and they have ample experience in overcoming stablecoin crises. However, the current situation is concerning.
“Make no mistake, everything is fragile. If SNX continues to fall and trust cracks, there is a real risk of a deeper and sharper collapse,” Thukral stated.
The platform’s token quotes have dropped 77% over the year, with a 25% decline in the last 30 days.
“Personally, I think sUSD will eventually recover closer to 1:1, but not without extremely high volatility initially. The longer the depeg continues, the more doubts it raises about the entire Synthetix ecosystem,” the expert concluded.
Former SEC head Gary Gensler called Bitcoin the only worthwhile crypto asset, while most other tokens exist solely due to speculative expectations.