sUSD, the synthetic stablecoin central to SNX, has sharply depegged from the U.S. dollar, plunging to $0.68 and sparking widespread concern throughout the DeFi space.
What began as a slight deviation has evolved into a month-long crisis, revealing major structural weaknesses in the protocol and unsettling investor confidence. At the heart of the issue is Synthetix’s shift to a new debt and collateral model under SIP-420 an upgrade meant to improve capital efficiency but one that unintentionally removed key stabilization incentives.
#PeckShieldAlert $sUSD has depegged, falling below $0.7 pic.twitter.com/e5FnOodSeV
— PeckShieldAlert (@PeckShieldAlert) April 18, 2025
Previously, SNX stakers were encouraged to buy discounted sUSD to repay their debt, helping restore the peg. The new system, however, lacks this feedback loop. Combined with declining SNX prices, low liquidity, and no automated safety nets, the protocol now finds itself in a fragile and volatile state.
sUSD Stablecoin: What’s fueling the collapse
At the heart of sUSD’s depegging crisis is the implementation of SIP-420, a major overhaul of Synthetix’s staking, debt issuance, and collateralization structure. Previously, SNX stakers had a clear incentive to help stabilize the peg: if sUSD dropped below $1, they could buy it on the open market at a discount and use it to repay debt effectively creating a built-in arbitrage loop that reinforced the $1 peg.
SIP-420 disrupted this dynamic. It slashed the collateralization ratio from 750% to 200% and introduced a 12-month debt forgiveness plan, allowing stakers to simply lock their SNX and watch their debt gradually dissolve regardless of sUSD’s market value. As a result, the economic incentive to buy discounted sUSD vanished.
【sUSDはなぜデペグしてる？ざっくり解説】
Synthetixのステーブルコイン・sUSDが、1ドルの基準価格から大幅に下落する状況が続いています。
主な原因は、sUSDの発行・管理に関する新しい仕組み「SIP… https://t.co/FdNASIVlgY pic.twitter.com/05RlQI7p06
— まかねこ🐻⛓️ (@makaneko_AI) April 18, 2025
With no strong buying pressure to support the peg, the market saw continuous selling sending sUSD tumbling to unprecedented lows. Despite the Synthetix treasury reportedly holding $30 million in sUSD, as well as reserves in USDC and OP, none of these have been mobilized to defend the peg.
The absence of a Peg Stability Module (PSM) or alternative arbitrage incentives leaves the system exposed, raising serious concerns about the long-term viability of sUSD’s price stability.
Market fallout and the battle to rebuild confidence
The ongoing instability of sUSD is having a growing impact on the broader Synthetix (SNX) ecosystem. Leveraged token platforms like Toros Finance have started pulling their products from the SNX protocol, citing instability tied to the depegged stablecoin.
The exodus began with BTC leveraged tokens on Optimism and soon extended to tokens like SUI, DOGE, and SOL, all previously built on SNX-powered infrastructure. While these leveraged products still function technically, their returns have been significantly undermined because profits are denominated in the now-devalued sUSD, diminishing the appeal of holding or using them.
As sUSD drifts further from its $1 target, overall trust in SNX-backed assets is declining. This erosion of confidence risks pushing more users away, draining liquidity, and shrinking the economic activity within the SNX network.
To counteract this, the Synthetix team has introduced the “sUSD 420 Pool”—a new incentive program designed to restore confidence. The initiative offers 5 million SNX in staking rewards over a 12-month period for users who lock their sUSD into the pool. Early access to this pool is being shared within community-run Discord channels and Reddit guides, where SNX stakers are helping each other transition into the new program.
Participants must commit to a 12-month lockup of sUSD, with SNX rewards distributed over the following three months after the campaign ends.
While this program could help absorb some of the circulating sUSD and relieve short-term selling pressure, it doesn’t solve the underlying issue. Without a peg stabilization mechanism or a return of incentive loops for SNX holders to buy and burn sUSD, the stablecoin’s recovery remains uncertain.
Ultimately, SNX’s long-term resilience will depend on deeper structural reforms reintroducing economic incentives, strengthening liquidity strategies, and rebuilding trust in the protocol’s core mechanics.
Finance Ministry official proposes Russia develop own Stablecoin
Russian Finance Ministry official has called for the development of a domestic stablecoin to proactively counter Western financial sanctions.
Russia weighs development of Its own Stablecoin
Osman Kabaloev, an official from Russia’s Ministry of Finance, has proposed the issuance of a domestically backed stablecoin to reduce the country’s exposure to international sanctions. His comments came shortly after both the U.S. government and Tether the issuer of USDT froze wallets connected to the Garantex crypto exchange last month.
According to Reuters, the proposed Russian stablecoin would function similarly to USDT but could be pegged to a broader range of fiat currencies, not just the U.S. dollar. “Recent developments highlight the need for Russia to create its own financial tools and reduce reliance on foreign platforms,” Kabaloev emphasized.
According to Reuters, Osman Kabaloev, Deputy Head of Russia’s Finance Ministry Financial Policy Department, said the country should consider developing its own stablecoins, potentially pegged to non-dollar currencies, following last month’s freeze of Russia-linked digital…
— Wu Blockchain (@WuBlockchain) April 16, 2025
Currently, Russia has approved pilot programs allowing crypto to be used for cross-border payments, amid disruptions to the traditional financial system caused by international sanctions. Some Russian companies have already used Bitcoin and USDT to facilitate oil trade with countries like China and India.
Although Central Bank Governor Elvira Nabiullina remains opposed to using crypto for domestic payments, she confirmed that Russian firms are actively exploring international settlements using digital assets under the country’s evolving regulatory framework.
Garantex crackdown fuels Russia’s push for Crypto sovereignty
Garantex, once one of Russia’s largest crypto exchanges, has come under coordinated attack from the U.S., the EU, and Tether. In February, the European Union imposed sanctions on the platform, accusing it of ties to sanctioned Russian banks such as Sberbank, Alfa-Bank, and T-Bank.
On March 6, Tether froze wallets holding over 2.5 billion rubles (approximately $30 million), forcing Garantex to halt all operations, including asset withdrawals. The crackdown escalated as authorities in the U.S., Germany, and Finland collaborated to seize the exchange’s infrastructure and domain.
The U.S. Department of Justice also issued indictments against Garantex’s leadership, accusing them of facilitating money laundering and cybercrime. Authorities estimate the platform processed at least $96 billion in illicit transactions since its launch in 2019.
Despite the takedown, Garantex is suspected to have resurfaced under a different name, continuing to trade ruble-linked stablecoins on an alternative platform.
This financial offensive from the West has forced Russia to reassess the strategic role of crypto within its national financial system. In response, the country is moving beyond rhetoric and enacting broad regulatory reforms.
On March 20, Evgeny Masharov, a member of Russia’s Civic Chamber, proposed the creation of a state-run crypto fund using digital assets seized from criminal cases an approach reminiscent of recent U.S. policy moves under the Trump administration. Meanwhile, lawmakers are also pushing to legally recognize cryptocurrencies as valid assets in criminal proceedings a key step toward formalizing Russia’s digital asset legal framework.
These developments come amid a global surge in stablecoin adoption. Between mid-2023 and early 2025, the stablecoin market capitalization surpassed $200 billion. Reports from Artemis and Dune show active stablecoin wallets increased by over 50% in just one year. In 2024 alone, stablecoin transaction volume hit $27.6 trillion surpassing the combined totals of Visa and Mastercard.
Standard Chartered recently forecasted that the supply of stablecoins could grow tenfold by 2028. Meanwhile, the U.S. Federal Reserve Chair has called the establishment of a regulatory framework for stablecoins “urgently necessary” in today’s climate.
Canary Capital submits proposal for Tron ETF featuring staking functionality
Just days ago, the Securities and Exchange Commission delayed its decision on Grayscale’s proposal to incorporate staking into its Ethereum ETF offerings.
Canary Capital is aiming to launch a new exchange-traded fund (ETF) that tracks the price of Tron’s native token, TRX, according to a recent filing with the U.S. Securities and Exchange Commission (SEC).
The hedge fund submitted a Form S-1 on Friday for the Canary Staked TRX ETF, which, as the name implies, intends to stake a portion of its TRX holdings. Staking operations would be conducted through third-party providers, with BitGo designated as the asset custodian. The ETF will track the spot price of TRX using CoinDesk Indices as the pricing benchmark.
Details such as the fund’s ticker symbol and management fees have yet to be disclosed.
Previously, several issuers had attempted to include staking functionality in their spot Ethereum (ETH) ETF filings, only to later remove the feature in amended submissions to improve their chances of gaining SEC approval. However, the regulatory climate appears to be shifting.
While former SEC Chair Gary Gensler took a hardline stance against staking in regulated products, the appointment of Paul Atkins, a crypto-friendly successor, has raised hopes among ETF issuers that staking could soon be allowed in spot crypto ETFs.
Most recently, the SEC postponed a decision on Grayscale’s February request to add staking features to its Ethereum Trust ETF (ETHE) and the Ethereum Mini Trust ETF (ETH), signaling ongoing deliberation within the agency.
If approved, Canary Capital’s TRX staking ETF could become one of the first U.S. crypto funds to offer direct exposure to staking rewards marking a significant evolution in how digital asset ETFs are structured and regulated.
