sUSD, the synthetic dollar-pegged asset from Synthetix slipped below its dollar peg yesterday

Synthetix's sUSD fell 4.6% from $0.96035 to $0.91608 in the early hours of March 31, according to CoinGecko data.

Stablecoin sUSD, the synthetic dollar-pegged asset from Synthetix (SNX), slipped below its dollar peg again yesterday, April 2. The stablecoin lost its peg earlier this week, on March 31.

Core contributors at Synthetix have acknowledged the ongoing peg instability but remain optimistic about stabilizing sUSD in the long run.

In a March 30 official Discord announcement, Fenway, a Synthetix core contributor, commented: “A strong sUSD peg is at the core of a successful 420 pool, we have been and will continue to fight to strengthen the peg,” adding: “We’re in a transitionary period[.]”

Fenway stated that "excess sUSD in the market was causing pressure on the price" of the USD-pegged asset, and promised that the team was taking measures to address the issue.

However, market observers remain cautious. Cork Protocol founder Robert Schmitt (@robdogeth on X) weighed in on the situation in an extended post on April 1, highlighting the core issue at play:

sUSD used to have a perfect peg for months! It's only in the past few weeks that it's started to depeg. The issue isn't sUSD itself, but rather the actions of a major liquidity provider on Curve. They've been selling the sUSD they get from Synthetix spot on the corresponding liquidity pool.

— robdogeth (@robdogeth) April 1, 2024

Furthermore, the heavily skewed nature of the sUSD liquidity pool on decentralized exchange (DEX) Curve Finance suggests that users are actively swapping the stablecoin. Per Wu Blockchain, on March 31, sUSD made up 75.21% of the DAI-USDC-USDT-SUSD liquidity pool on Curve Finance.

This isn't the first time sUSD has lost its peg. The stablecoin previously slipped from its dollar peg in May 2024. According to risk manager Chaos Labs, that depeg was caused by a major liquidity provider selling the sUSD it got from Synthetix spot on the corresponding liquidity pool on Curve.

Synthetix’s sUSD is currently trading at $0.952. With a market cap just under $29 million, it’s the 36th largest USD stablecoin, according to CoinGecko data.