sUSD will repeg and return to $1.00 – This has always been what we’ve communicated and our actions have always been driving in this direction.
From Monday, June 2nd, 23:59 UTC, SNX stakers with debt will be required to increase the amount of sUSD they’ve deposited to 20% in order for their jubilee to continue. Otherwise, it will be paused until they meet the requirement.
Stakers: please head to 420.synthetix.io as soon as possible to ensure your jubilee continues.
Why did sUSD depeg?
Earlier this year, we introduced SIP-420, a delegated staking design for SNX that better meets the needs of today’s Synthetix. As part of the transition, Synthetix offered stakers a debt jubilee, primarily designed at rectifying historical debt inflation that came from many sources, including frontrunners, debt pool skew, and one-off events.
Almost immediately after the jubilee was introduced, stakers started dumping sUSD, effectively ruining the party for everyone. SNX stakers inherently are responsible for managing the system. When given the opportunity to wipe millions of dollars of debt from their accounts, the hope was they wouldn’t repay the system by dumping its stablecoin to $0.70.
So given a great responsibility and the opportunity to zero debt, stakers failed (actually most of the reason we’re now doing delegated staking! Stakers by-and-large are degens).
Repegging
To counter the excess sUSD supply that ended up in markets, Synthetix introduced a requirement, whereby SNX debt holders needed to maintain a variable ratio of sUSD in the 420 Pool relative to their debt being jubileed.
This started at 10% and was highly effective in getting sUSD back to $0.96. But the last push to $1.00 has proven to be tricky, despite several actions being taken including $2m of Treasury buying and various campaign extensions (Curve, 420 Pool, Infinex).
Synthetix is now increasing the ratio of sUSD SNX debt holders are required to deposit into the 420 Pool from 10% of their original debt balance to 20%.
Soonthetix
With the peg restored, the protocol will be strongly positioned to continue to execute on two core initiatives:
- 420 Pool operationalisation – the success of SIP-420 is underwritten by a strong peg. With sUSD back at $1.00, Synthetix can finally start exploring ways to earn yield and start the 420 flywheel.
- A Synthetix perp on Ethereum mainnet – A low latency and high throughput perp venue that settles directly to Eth mainnet. Are we crazy? Wait and see!
Legacy staking was once a cornerstone of Synthetix’s success, driving early growth and adoption. However, over time, it became a source of headwinds, creating persistent challenges that hindered progress. As such, Synthetix made the strategic decision to sunset legacy staking. While this transition temporarily disrupted the sUSD peg, our team swiftly recalibrated the protocol’s incentives and mechanisms, restoring confidence and stabilizing sUSD back to its $1.00 target.
With the peg restored, Synthetix now has a clear path forward to start earning yield in the 420 pool and launch the v4 perps on Ethereum mainnet. Let’s get it.
Join the Community
sUSD will continue to play a crucial role in the Synthetix ecosystem, and restoring sUSD to $1 is essential. Thanks to our stakers for prompt action in restoring the peg and supporting the future of the Synthetix protocol.
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