The native stablecoin of the Synthetix protocol, known as Synthetix USD (sUSD), has hit its lowest valuation in five years, continuing a prolonged struggle to maintain its $1 stability.
Since the beginning of 2025, this asset has experienced ongoing volatility. On January 1, sUSD fell to $0.96 but only climbed back to $0.99 by early February. The price remained unstable throughout February before finding some equilibrium in March.
On April 10, sUSD reached a five-year low of $0.83, as per data from CoinGecko.
SUSD is a stablecoin that relies on crypto collateralization. Users must lock up SNX tokens to mint sUSD, making its stability closely tied to the market price of SNX.
1-month price chart of Synthetix USD stablecoin. Source: CoinGecko
Risks of Synthetix USD’s “death spiral”
“The death spiral scenario persists; if the value of SNX falls enough, sUSD is not fully backed. If users begin to fear that sUSD is unbacked and choose to redeem it for SNX and sell it, this could create further downward pressure on SNX, leading to a cascading deleveraging event.”
Despite these concerns, he emphasized that such a collapse is unlikely due to Synthetix’s treasury of $30 million, which covers about half of the outstanding sUSD debt. This reserve could potentially be used to mitigate a death spiral situation.
“The main reason sUSD is less likely to enter a death spiral is that the Synthetix treasury holds about $30 million of sUSD, which represents roughly half of the outstanding debt. This sUSD can be unwound to avert a death spiral,” he stated.
The publication reached out to him for additional comments but had not received a response by the time this was published.
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Stablecoin diverges from dollar peg amid market downturn
In addition to sUSD, another stablecoin recently deviated from its dollar peg in light of the downturns in the crypto market. On April 7, Synnax Stablecoin (syUSD) fell to $0.94. The project indicated that concentrated selling activities temporarily caused a “slight deviation” from its dollar peg, stating that it is working on a fully open redemption system.
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