The Silent sUSD Depeg: What Happened to $10K in Stablecoin Value

sUSD fell as low as $0.66 after a protocol update, cutting a $10,000 balance to about $6,800 during the April 2025 depeg.

A sharp drop in sUSD left several holders facing unexpected losses after the stablecoin moved far below its one-dollar peg. Some users reported reduced balances despite making no trades.

The decline occurred with limited public discussion, even as losses became visible across wallets.

sUSD Depegs After Protocol Update

The sUSD depeg occurred mainly in April 2025 after Synthetix introduced a major protocol update called SIP-420. The update aimed to improve capital efficiency and adjust debt management across the system.

Soon after the update, sUSD began trading below its intended value. Market data showed prices falling to a range near $0.66 to $0.68 at the lowest point.

For holders of 10,000 sUSD, the drop reduced the value to roughly $6,800. These losses occurred even when no trading activity took place.

Structural Changes Weakened the Peg

One key factor behind the depeg was a change in collateral rules. SIP-420 lowered the collateral ratio from 750% to 200 percent.

The update also introduced a shared debt pool model. This removed incentives for individual stakers to buy discounted sUSD to manage personal debt.

Liquidity conditions added further pressure. sUSD accounted for more than 75 percent of some liquidity pools, increasing sell-side imbalance.

During the same period, SNX prices declined by about 26 percent. Since SNX backs sUSD, this weakened collateral conditions further.

Trading Competition Results and User Exposure

The depeg coincided with Season 2 of the Synthetix Mainnet Trading Competition. Many users converted USDC to sUSD to meet entry requirements.

Some participants reported losses despite not placing trades. At a price near $0.75, a 10,000 sUSD balance was worth about $7,500.

Season 2 of the trading competition has since ended. Synthetix announced @rektmando as the $200,000 prize winner, while second and third place received $100,000 each.

The competition results were announced after the depeg had already occurred. For some users, losses were realized while funds remained idle.

Related Reading: Stablecoins Act as Banking Alternative for Millions Across Africa

Recovery Efforts and Current Status

Following the April decline, the Synthetix team launched a three-phase recovery plan. One measure involved the USD 420 pool to reduce circulating supply.

The pool encouraged users to lock sUSD for 12 months. In return, participants received rewards funded by five million SNX tokens.

By October 2025, sUSD had recovered close to its peg. Prices traded near $0.998 after months of gradual stabilization.

As of January 2026, the protocol remains in transition. A scheduled unlock of five million SNX in April 2026 may affect future price behavior.

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