Synthetix’s algorithmic stablecoin SUSD continues to drift his $ 1 PEG, which is currently being traded at $ 0.90.
The Depeging started in March, with SUSD slipped shortly under $ 1, but the situation deteriorated after the implementation of SIP-420 and a board proposal aimed at improving capital efficiency and simplifying the user experience within the Synthetix (SNX) ecosystem. According to PARSEC researchThe implementation of SIP-420 has unintentionally caused a large increase in the supply of SUD, which caused the current Depeg.
In particular, SIP-420 introduced a strike pool of protocol, so that SNX holders can delegate their commitment to a shared pool instead of managing their own fault and turning Susd. The new setup reduced the collateralization ratio from 500% to 200%, making it easier to mint more susd – about 2.5x, according to Parsec. This has removed the stabilization mechanism from the Stablecoin – the stimulus for individual strikers to buy Susd with a discount to pay off their debt when the price under PEG drops.
Now that the debt merged, strikers in essence have no skin in the game to restore the PEG. Combined with the fact that the 420 Pool now has more than $ 80 million in SNX, the SUSD supply has been considerably expanded, with some curve -liquidity pools with more than 90% SUSD. Without immediate demand to balance this increased supply, the price of SUSD will continue to fall.
To make matters worse, Infinex began to stimulate the possession of SUSD in the Infinex wallet just before it started de -caps. However, these stimuli have led to more liquidity in the system without a similar question. As a user on the Discord channel of Infinex written“You promote susd through campaigns, you take responsibility.”
The Synthetix team has reassured users that this is a ‘transition period’. They work on creating new requirements, such as Aave (Aave) and Ethena (ENA) integrations, to compensate for the surplus range of SUSD. Moreover, they have promised to strengthen stimuli pools, in particular on curve, to restore stability.
In summary, the SIP-420-Upgrade capital efficiency and a simpler UX brought to Synthetix, but it has removed the organic reflexive PEG stabilizer, resulting in the SUSD Depeg as a side effect. By going to a protocol deployment pool and reducing the collateralization ratio, SIP-420 has led to an increase in SUS supply without sufficient demand to compensate for it. This has ensured that the Stablecoin to Depeg, with the price that is currently floating around $ 0.90. This means that SUSD holders are left with a choice: leave now or hold and wait for full recovery.
