Bitcoin (BTC) and altcoins have been on the rise following US President Donald Trump’s decision to suspend customs duties with most countries.
While there was a relief in the cryptocurrency market, a stablecoin experienced a decline.
Accordingly, the Synthetix (SNX)-based decentralized stablecoin sUSD lost its peg to the dollar and fell below $1.
Synthetix-based stablecoin sUSD continued its depeg, falling to levels as low as $0.835.
At the time of writing, sUSD has recovered slightly and continues to trade at $0.862.
This has raised new concerns about the stability of the project.
While the reason for the depeg in sUSD is wondered, according to Fenway, one of the main writers of Synthetix, sUSD lost its fixation to the dollar due to excessive supply in the market.
It was stated that the imbalance was seen the most in Curve, as sUSD makes up 75% of the DAI-USDC-USDT-sUSD pool. This was interpreted as a sign that investors were selling the asset.
sUSD experienced a similar depeg situation in May 2024 when a major liquidity provider deposited sUSD into Curve.
It is stated that one of the reasons for the depeg is that Synthetix founder Kain Warwick announced that he sold 90% of his Ethereum (ETH) assets and increased his SNX position. Accordingly, it is evaluated that the new peg restoration mechanism may be one of the reasons for the depeg of sUSD.
sUSD experienced a similar depeg event in May 2024. This depeg was caused by increased sales on decentralized exchanges, and sUSD fell to $0.92.
*This is not investment advice.
