Synthetix sUSD Peg Update

Synthetix CC -

Since the release of SIP-420, which changes how the Synthetix protocol manages debt, sUSD has navigated a period of instability as a stablecoin.

While we are certain of the longterm value of sUSD as a central mechansim of Synthetix, this post recaps the steps that have been taken to help navigate the period of change, and formalises the next steps that will be taken to close the gap towards $1; including market-led protocol buybacks of sUSD.

The Recap

As the market has responded to these SIP-420 changes, several measures have been observed and carried out which have softened the impact and corrected the price without heavy intervention:

  • Short-term mechanisms such as the Infinex sUSD Rewards Campaign (1 week left)
  • Organic sUSD market buyers are in play, traders who understand the long-term strength of Synthetix
  • sUSD deposits in the 420 Pool have moved the needle significantly; still offering 72% APY at time of writing
  • 420 debt relievooors are now required to maintain a 10% sUSD ratio to stake, this has been largely complied with by stakers in the 420 Pool

We’re at 93 cents today. So, what’s next?

Synthetix has made the plan public: we're building a market-leading perps exchange on Ethereum mainnet. And we’re accelerating towards that goal, in part via the proposed acquisition of Derive.

sUSD will be a crucial part of Synthetix moving forward. In the long term, the protocol intends to maintain the peg through natural demand and market dynamics, rather than through incentives or buybacks.

But in the meantime, Synthetix has a reputation to uphold, and a responsibility to DeFi more broadly.

So, with roughly 6.5 cents left to reclaim, we are today announcing the beginning of treasury buy-backs. These will occur and on-market purchases, not via OTC deals, and will be capped at a maximum of $1 million USD per day, allocated as needed to support natural market forces.

Stay up-to-date

As referenced by Kain in his X thread today, Synthetix is in the midst of an aggressive reboot, on a mission to bring DeFi value back to mainnet, and back to Synthetix.

Stay up to date via the Synthetix discord, Synthetix X and by voting on SIP-415.