Kain Warwick, the founder of Synthetix, has vowed to increase pressure on SNX token holders to compel them to use a new staking mechanism aimed at restoring the peg of the stablecoin sUSD.
Update on the sUSD depeg. We have implemented an sUSD staking mechanism but it’s very manual until the UI goes live in a few days. Here was my hot take from discord though.
— kain.depeg (@kaiynne) April 21, 2025
The “stablecoin” lost its dollar parity at the end of March. On April 18, the sUSD rate plummeted to a local low of $0.68. At the time of writing, the price had recovered to $0.77 (CoinGecko).
The issuance of the “synthetic stablecoin” is backed by SNX locked in staking.
Synthetix attributed the current volatility of sUSD to the implementation of SIP-420. The update shifted debt risks from stakers to the protocol itself.
On April 18, the project team launched the 420 Pool solution. This mechanism allows sUSD to be locked for a year to earn rewards in SNX.
? The sUSD 420 Pool is launching with rewards starting in 36 hours ?
SNX stakers in the 420 Pool can deposit sUSD to earn a share of 5m SNX over 12 months — or 13,698.6 SNX daily
? [1/5] pic.twitter.com/Xy5QUPthK9
— Synthetix ⚔️ (@synthetix_io) April 18, 2025
Warwick acknowledged that the mechanism’s user interface is currently “very manual.” He expects developers to refine it within a few days. Following this, the Synthetix founder plans to assess the sUSD depeg dynamics and, if the coin does not recover to the dollar, increase pressure on pool users.
“This is entirely solvable, and it is the responsibility of SNX stakers. We haven’t done anything that wouldn’t work; we’ve tried the carrot, and it sort of worked, but I’ll reserve judgment. I think everyone knows how much I love the stick, so if you’re hoping to get by with just the carrot, I have bad news for you,” Warwick stated.
He emphasized that the net worth of SNX in staking is “several billion,” so “there is money to solve the problem,” and it just requires adjusting incentives.
Only just skimmed the mechanics now, so feel free to school me but tying a stablecoin peg to any token is ‘trust me, bro’ economics? Given long enough time frame, the peg will break
— lbx (@bhxlla) April 21, 2025
Regarding the 420 Pool, one commentator noted:
“Only just skimmed the mechanics now, so feel free to school me. But tying a stablecoin peg to any token is ‘trust me, bro’ economics. Given long enough time frame, the peg will break.”
In his view, the proposed “extremely immature” solution for maintaining sUSD stability causes “concern and negativity.”
Earlier, Standard Chartered forecasted that the total capitalization of stablecoins could grow to ~$2 trillion by 2028.