Kain Warwick, the founder of Synthetix, has publicly accepted responsibility for the prolonged depeg of the protocol's stablecoin sUSD, which has traded below $1 for over a year. In a detailed thread posted on February 4, 2025, he outlined a plan to wind down the SNX-backed stablecoin and replace it with a basis-vault-backed instrument on the new v4 exchange. The announcement follows the passage of SIP-423, which freezes the sUSD contract and compensates holders with four SNX per sUSD.
Treasury Absorption and the Depeg
Warwick revealed that the protocol's treasury has absorbed roughly 30% of the outstanding sUSD supply over the past year, but buying back the rest is not feasible. Selling SNX at current prices to retire the remaining sUSD would be value-destructive, and there is no demand for locked SNX to repeg without deepening the discount. He noted that locking SNX at today's price implies a 75% discount against the liquid token, which he described as "probably accurate" given market conditions. At the time of writing, SNX trades at $0.2426, and sUSD is quoted at $0.25, far below its $1.00 target.
The 420 Pool and Three Key Failures
Warwick credited the 420 pool mechanism with saving the protocol from a death spiral, but at the cost of the sUSD peg. He framed sUSD as a liability of SNX holders, justifying the use of SNX for compensation in the wind-down. He attributed the depeg to three compounding failures: the v3 exchange was a "dumpster fire," the v4 build took too long to scale, and yield generation on sUSD balances failed to materialize. Supply once exceeded $1 billion across sUSD and other synths, but an orderly wind-down reduced it to roughly $50 million. Warwick described the remaining tail as "functionally insolvent" without exchange revenue.
Basis-Vault Replacement and Missed Opportunity
The forward-looking plan involves replacing sUSD with a basis-vault-backed stablecoin on the v4 exchange on Ethereum mainnet. Unlike sUSD, which relied on SNX collateral, the new stablecoin earns yield from funding-rate arbitrage between spot and perpetual positions. Warwick did not specify a launch timeline or target supply. He also acknowledged that Synthetix missed the 2023-2024 on-chain perpetuals expansion due to development delays, stating, "Synthetix was positioned almost perfectly to take advantage of the Perp Dex meta, but we fumbled hard." He closed the thread expressing confidence in a recovery, though he noted the market is not currently pricing one in. Synthetix's total value locked stands at $32.5 million, with SNX at a market capitalization of $83.6 million.