SUSD Stablecoin by Synthetix has earned its second pegging episode for the past month. This time, the asset support Stablecoin was under $0.90, which was around $0.83.
The SUSD Stablecoin issued by Synthetix is below $0.90, down about $0.83. This is the second SUSD hair removal event in the past month. Stablecoin is issued on a relatively small scale with a circulation supply of only 30.3m.
SUSD Stablecoin could face more hair removal events due to changes in its collateral and casting rules. |Source: Coingecko
For SUSD, this is the second DE-PEG since the end of March, and a total of three DE-PEGs over the past month. The asset has a five-year history with a deeper crisis and a lower $0.40, and is lined up among high-risk stub coins.
SUSD price levels remained relatively flat during the Bear market in 2023, but DE-PEG resumed after market volatility increased. The current event arrives after Synthetix doubled its SUSD supply in a month by encouraging Snx token staking.
The current supply of SUSD Stubcoin is around 10% of the 2021 level, when supply peaked above 294m tokens. Synthetix attempted to revive SUSD after supply recently fell to a low token of 15m tokens.
At the time, Stablecoin had sunk to a low of $0.92 to $0.91, and Synthetix had to intervene in DE-PEG to explain. According to the Stablecoin publisher, SUSD is still in the transition period where DE-PEG is expected, and the protocol will work to stabilize the assets again.
Synthetix aims to rebuild its assets
The current expansion of SUSD is tied to the Synthetix 420 pool. This pool allows previous SNX stakers to deposit more tokens and earn passive income. Previously, Synthetix worked as a Defi protocol. There, traders had to manually control their debts, often leading to liquidation.
Previously, individual wallets may have built SUSD with a collateral ratio of 750% of SNX deposits. Currently, the 420 pool is planning to build SUSD based on all the tokens it has accumulated and reduce the collateral rate to 200%. Next year there is no quick mechanism to buy SUSD with penny for a dollar. Therefore, there is a risk of additional DE-PEG.
The effect of SUSD may be limited as tokens primarily use other DEXs to trade with USDT and USDC. However, the new mint model tests Synthetix’s approach to generate and preserve reliable Stablecoin.
All SNX owners depositing in the 420 pool will allow debts for 12 months. The current DE-PEG does not lead to SNX staking spills, as early exits will result in penalties.
Users who bet on SNX in the new pool will need to wait a certain period to release their previous debt. In the meantime, deposited SNX will be used for Mint SUSD at an overload ratio of 500%.
Currently, Synthetix has only recovered in locked value from over $20 billion in 2021 bull market. The expansion of SUSD supply over the past month has arrived in the golden age for the issuance and use of Stablecoin. However, small projects that rely on crypto collateral remain at high risk.
After DE-PEG news, SNX traded at $0.63, close to its three-month low. The Synthetix Project is outside the RWA protocol narrative and operates as a secured Stablecoin issuer providing passive income. Synthetix remains one of the most active issuers of tokenized RWA, but tokens are behind Ondo and OM.
The project also comes with support from Synthetix Dao, and costs more than $32 million for the Treasury. Dao It has a diverse portfolio of 1M USDC, $731k for SNX tokens, and the rest is a variety of Stivcoins and even meme tokens like Pepe. Synthetix is one of the oldest Defi protocols that has endured multiple market cycles since 2018. In the case of SUSD, the risk may be short-lived, but protocol users may have stressful days, combined with the volatility of the general crypto market.
