sUSD Continues to Depeg from Its $1 Peg, Reaching All-Time Lows Below $0.70

Synthetix's native stablecoin, sUSD, continues to drift further from its intended $1 peg, reaching all-time lows below $0.70.

Synthetix’s (SNX) native stablecoin, sUSD, is showing no signs of slowing down in its depegging journey, hitting new all-time lows below $0.70. The crypto-collateralized stablecoin, which is backed by SNX tokens, has been sliding since the beginning of 2025, with recent price action showing a concerning downward trend.

According to CoinMarketCap data, sUSD is currently trading around $0.70, showcasing a 30% divergence from its target peg with the US dollar. The stablecoin reportedly touched as low as $0.66 before showing a slight recovery.

This decline marks a stark contrast to what users typically expect from a stablecoin, which is designed to maintain a stable value relative to its peg, hence the name. A Chart Showing sUSD’s Recent Price Action. The crypto-collateralized stablecoin has slid to lows of $0.66 in recent times.

Depegging Crisis and Protocol Changes

The genesis of sUSD’s depegging crisis can be traced back to mid-March 2025. By April 9, the stablecoin had slid to approximately $0.84, highlighting a rapid downward trajectory. To put things in perspective, the market capitalization of sUSD has decreased from $30 million at the start of April to around $24.5 million at press time.

The primary cause of sUSD’s instability appears to be recent protocol changes, particularly the implementation of Synthetix Improvement Proposal 420 (SIP-420). This proposal was designed to enhance capital efficiency but has had some unintended consequences for the stablecoin’s stability.

SIP-420 introduced a new staking pool called the “420 Pool” and decreased the collateralization ratio from 500% to 200%. While this change was intended to improve efficiency, it has resulted in an oversupply of sUSD that has outpaced market demand.

The proposal also shifts debt risk from stakers to the protocol itself, creating what Synthetix describes as “structural shifts” in the ecosystem. These changes have removed the primary driver of sUSD buying, contributing to the current volatility.

Kain Warwick, founder of Synthetix, addressed the situation on April 2, explaining that the volatility is largely due to transitions in the protocol’s mechanisms. “New mechanisms are being introduced, but in this transition, there will be some volatility,” Warwick stated in a post on X.

Relative Strength of SNX Despite sUSD’s Troubles

It’s worth noting that despite sUSD’s troubles, the SNX token has shown resilience. While SNX has slid approximately 26% over the past 30 days amid the broader crypto market downturn, it has remained relatively stable in recent weeks. In fact, SNX is up 7.5% in a 24-hour period according to one report.

This resilience could be attributed to several factors, including the increasing demand for SNX tokens as users enter the 420 Pool and the protocol’s efforts to adjust its capital structure. Recently, Synthetix disclosed that it had sold 90% of its ETH position and used the funds to increase their SNX holdings.

This adjustment in the protocol’s collateral composition could also be having an effect on investor perception of sUSD’s stability. As the primary backing asset for the stablecoin, any significant changes in the protocol’s capital structure are likely to be closely monitored by users.

It remains to be seen how quickly sUSD can recover from its depegging troubles. The success of Synthetix’s plans to restore the stablecoin’s peg and mitigate the oversupply of sUSD will be crucial in determining the long-term health of the Synthetix ecosystem.