As per current market data, the Synthetix USD (SUSD) stablecoin has dropped below its intended value of $1. Charts illustrate that the token hit a low of $0.915 before rebounding slightly to $0.958 per unit as of 8 a.m. EDT on Friday.

SUSD Stablecoin Struggles Below $1 Mark

The Synthetix USD (SUSD), a stablecoin issued by Synthetix, is encountering difficulties in maintaining its 1:1 parity with the US dollar. This deviation from its target value is attributed to significant selling pressure on decentralized exchange (DEX) platforms. Various decentralized finance (DeFi) platforms are exploring strategies to address the associated risks linked with SUSD. For instance, Chaos Labs has alerted the Aave community and provided suggestions for mitigation.

Synthetix Stablecoin SUSD Falls Below $1 Threshold, Faces Recovery Challenges

Chaos Labs has outlined the potential causes behind the SUSD issue. The report elaborated that on May 16, 2024, SUSD experienced a depegging event, dropping to $0.915 in comparison to USDC. It highlighted that the depegging was triggered by a notable withdrawal of funds by a SBTC/WBTC liquidity provider, who utilized Synthetix's spot synth redemption to acquire SUSD and then sold it in the corresponding Curve pool. Although SUSD has recovered from its low of $0.915, it has not surpassed $0.96.

Concerns regarding SUSD have been raised previously. In February, the independent nonprofit stablecoin assessment entity Bluechip assigned Synthetix's stablecoin an "F grade" and placed it on the organization's "Red Flag List," advising against the use of the SUSD token. SUSD joins a list of stablecoins that have faced challenges in maintaining their intended $1 value. While some, like Terra's UST, have encountered complete failure, others such as TUSD and USDD have experienced minor setbacks but eventually regained their $1 price. By 10:10 a.m. EDT on Friday, SUSD has marginally risen to $0.968 per coin.

What are your thoughts on SUSD's depegging incident this week? Share your views in the comments section below.