sUSD depegging is caused by the change of SIP-420 mechanism, not bad debt problem

Odaily News According to Parsec analysis, the recent depegging of Synthetix stablecoin sUSD is not due to bad debt or protocol failure, but a side effect of the adjustment of the SIP-420 mechanism. SIP-420 introduces a shared debt pool mechanism. SNX pledgers no longer mint sUSD alone and assume personal debts, but entrust funds to the public pool, thereby achieving a structure without liquidation and personal debt. However, when the sUSD price deviates from the anchor value, the pledger no longer has the motivation to repurchase sUSD at a low price to repay the debt, and the original self-regulation mechanism of the protocol fails. At the same time, more than $80 million of SNX flowed into the SIP-420 pool, and the growth of holdings driven by Infinex activities led to a rapid expansion of sUSD supply, while the market lacked corresponding demand, and the anchoring mechanism was further under pressure. At present, sUSD has fallen to $0.87, with a depegging rate of more than 13%. The Synthetix team said that it is rebuilding the demand for sUSD through integration with Aave and Ethena and strengthening Curve incentives.