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What’s Up With Synthetix Stablecoin (sUSD) as USD Peg Drops to $0.83?
The value of Synthetix’s stablecoin, sUSD, has plummeted to a five-year low of $0.83, sparking concerns about the stability of this asset and its potential impact on the broader cryptocurrency market.
In recent times, sUSD has been experiencing significant instability, having already dropped to $0.96 at the start of 2025 before recovering slightly to $0.99 in early February. This trend continued throughout the month, with prices remaining volatile until achieving stability in March. However, a dramatic decline occurred on April 10, as the sUSD token fell to an unprecedented low of $0.83.
This sudden downturn has raised questions about the potential risks posed by the “death spiral” scenario for this stablecoin. According to Rob Schmitt, co-founder of Cork Protocol, a risk tokenization platform, this situation bears some resemblance to the circumstances that led to the catastrophic collapse of Terra’s algorithmic stablecoin, UST, in 2022.
Schmitt highlights the stark similarity between sUSD and UST’s models, both being backed by a specific cryptocurrency. While acknowledging key differences, including collateralization and debt management, he emphasizes that the fundamental risks underlying such designs remain unchanged.
In response to these concerns, Schmitt posits that an unwinding scenario might lead to the utilization of Synthetix’s massive $30 million treasury, which accounts for nearly half of the outstanding sUSD debt. This provision could potentially mitigate the potential impact of a “death spiral” scenario.
It is worth noting that this is not the first instance of sUSD depegging, as it previously experienced a decline to $0.92 in 2024. In response to these incidents, Synthetix founder Kain Warwick attributed them to the removal of the primary driver behind sUSD buying and promised new mechanisms would be introduced to address this issue.
In light of these recent events, investors are left wondering whether the current decline will eventually recover or if it marks the beginning of a downward spiral.
Source: https://www.coinspeaker.com/synthetix-susd-stablecoin-loses-its-peg/
