#What is Synthetix Doing with Its Legacy Stablecoin?
Synthetix has decided to phase out its outdated synthetic stablecoin known as sUSD. This initiative, detailed in SIP-423, was announced by founder Kain Warwick and core contributor Benjamin Celermajer. Their plan involves both the Ethereum mainnet and Optimism, where holders will receive compensation in the form of newly minted SNX tokens for their sUSD.
How does this conversion work? Holders will get 4 SNX tokens for each $1 of sUSD they possess, effectively setting the exchange rate at a reference price of $0.25 per SNX. However, this comes with conditions. The newly minted tokens will be subject to a one-year lock-up period, followed by an additional one-year vesting schedule.
#What Happened to sUSD's Stability?
sUSD was initially designed to maintain a value of $1 but is currently trading around $0.25, according to data from CoinGecko and DefiLlama. With approximately 40 million sUSD still in circulation, the compensation for holders amounts to about $40 million at face value.
The updated plan also revises the Debt Jubilee program linked to the 420 Pool. The new proposal eliminates the staking ratio requirements for sUSD altogether, allowing for excessive debt to be either repaid early or carried forward under a new lock period of four years, with a one-year vesting schedule.
A governance snapshot vote is anticipated for June 26, 2026. The Synthetix governance model mandates that 4 out of 7 Spartan Council members must sign off for proposals to be approved.
#Why is Synthetix Making These Changes Now?
Synthetix has been indicating a strategic shift for some time. The protocol is focusing towards perpetual futures trading on the Ethereum mainnet, stepping back from the synthetic asset model that originally defined its identity. SIP-423 represents a crucial step in this transition, separating SNX staking from previous sUSD liabilities.
Further plans include buyback initiatives for both SNX and sUSD, aiming to restore sUSD's peg by the end of Q2 2026. More implementation details will be available in a forthcoming proposal, identified as SIP-424.
#What Should Investors Expect?
If you are an sUSD holder, you will receive SNX tokens valued at $1 for each sUSD at face value. Keep in mind that these tokens are locked for one year and will then vest over an additional year. To break even in relation to sUSD’s current market value, SNX must maintain a price above $0.25.
For current SNX holders, the introduction of new tokens for compensating sUSD holders inherently dilutes existing holdings. Nevertheless, alleviating the burden of legacy debt could potentially attract new capital to Synthetix, especially as it shifts gears toward its perpetual futures operation.