Synthetix Launches sUSD 420 Pool to Stabilize Its Algorithmic Stablecoin

Synthetix has launched a new liquidity initiative aimed at stabilizing its algorithmic stablecoin sUSD, which has been trading well below its intended $1 peg.

As part of efforts to stabilize its algorithmic stablecoin, sUSD, after recent depegging, Synthetix is launching a new liquidity initiative.

The “sUSD 420 Pool” will reward participants with 5 million SNX tokens over 12 months, beginning next week, founder Kain Warwick announced on X, formerly Twitter.

The pool is an attempt to curb the effects of the ongoing depeg, which saw sUSD drop to $0.8224 as of April 18, up over 7% in 24 hours, according to CoinGecko. It was as low as $0.63.

Depeg follows protocol changes

The decline has been linked to recent protocol changes, known as Synthetix Improvement Proposal 420, which introduced a protocol-owned staking pool and lowered the collateralization ratio for minting sUSD from 500% to 200%.

This change has caused a significant increase in sUSD supply, outpacing demand and leading to imbalances in decentralized exchange pools like Curve, where sUSD now makes up over 90% of some liquidity pairs.

The new 420 Pool requires SNX stakers to also lock their sUSD for a year to earn daily SNX rewards, which will also be locked and vest over three months after the campaign ends.

Those who only want to participate in the 420 Pool can do so by locking 100 sUSD and selecting the “420 Pool” option within the staking portal.

Early access is available via Synthetix’s Discord, with official front-end support launching next week.

Synthetix has called the current phase a “transition period” and plans to support sUSD through additional incentives and new use cases, including the upcoming Snaxchain initiative.