Synthetix Launches 420 Pool to Simplify Staking and Address Stablecoin Challenges

Synthetix has unveiled a new liquidity program aimed at addressing ongoing issues with its algorithmic stablecoin, sUSD, which has been struggling to maintain its $1 peg. The newly launched “sUSD 420 Pool,” announced by Synthetix founder Kain Warwick on X, seeks to stabilize the stablecoin by offering incentives to liquidity providers.

To attract participants, the pool will distribute a total of 5 million SNX tokens over a 12-month period. This move is intended to mitigate the effects of sUSD’s persistent depegging, as the stablecoin recently dropped to as low as $0.8224, according to CoinGecko data on April 18. Although it saw a 7% increase within 24 hours, it had previously sunk as low as $0.63.

The decline in sUSD’s value has been tied to recent changes implemented through Synthetix Improvement Proposal 420. This update introduced a protocol-owned staking pool and reduced the collateralization ratio required for minting sUSD from 500% to 200%. The result has been an over-supply of sUSD, outpacing demand and leading to imbalances in decentralized exchange pools such as Curve, where sUSD now comprises over 90% of some liquidity pairs.

To participate in the sUSD 420 Pool, SNX stakers must lock their sUSD for one year to earn daily SNX rewards. These rewards will also be locked and vest over the three months following the campaign’s conclusion. While official support for the program is expected to launch next week, early access is already available through Synthetix’s Discord community.

Synthetix has labeled the current period as a “transition phase” and plans to continue supporting sUSD with additional incentives and new use cases, including the upcoming Snaxchain initiative.