Synthetix Founder Warns SNX Stakers: Fix sUSD Depeg or Face the “Stick”

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Synthetix Founder Warns SNX Stakers: Fix sUSD Depeg or Face the “Stick”

Kain Warwick pushes for community action as Synthetix’s sUSD stablecoin continues to struggle with price stability

sUSD Stablecoin Slips, Prompting Urgent Action from Synthetix Leadership

The crypto world is watching closely as Synthetix founder Kain Warwick issues a stern warning to SNX token stakers: support the new staking mechanism designed to stabilize sUSD — or be forced into action.

In a bold April 21 post on X, Warwick didn’t mince words. “We tried the carrot, now I’m bringing out the stick,” he said, addressing the worrying depeg of sUSD, Synthetix’s crypto-backed stablecoin.

The problem? sUSD fell to $0.68 on April 18 — a sharp 31% drop from its intended $1 peg. Although it recovered slightly to around $0.77 by April 21, the stablecoin remains far from its target, raising alarms throughout the DeFi community.

The New “sUSD 420 Pool” Staking Incentive: A Manual Fix for a Major Problem

In an attempt to restore the peg, Synthetix launched the sUSD 420 Pool on April 18, a new staking mechanism that rewards users with a share of 5 million SNX tokens over 12 months if they lock up their sUSD for a year.

However, the process is currently “very manual,” Warwick admitted, due to the lack of a front-end user interface. Once the UI is live, Warwick expects stronger participation — and warns that pressure will increase if support lags.

“The money to solve this is there. We just need to dial in the incentives,” Warwick emphasized.

From Carrot to Stick: A Tense Message to the Community

In his post, Warwick acknowledged the community’s passivity:

“We tried nothing which didn’t work. Now we’ve tried the carrot, and it kind of worked.”

Now, he’s threatening to escalate community pressure to force participation. “If you think you will get away with not eating the carrot, I’ve got some bad news for you,” he said, referring to the incentives offered in the 420 Pool.

His tone underscores how critical SNX stakers are to fixing the depeg issue — a point reinforced by his claim that the collective net worth of SNX stakers is in the billions.

SIP-420 and “Structural Shifts” Behind the Volatility

A Synthetix spokesperson told Cointelegraph that the recent volatility stemmed from “structural shifts” following the SIP-420 proposal, which altered how debt risk is handled — shifting it from stakers to the protocol itself.

While designed to enhance long-term protocol stability, the change may have contributed to short-term price dislocations.

Stablecoin Depegs Are Not New — And Not Always Fatal

sUSD’s troubles echo previous stablecoin depegging events, such as:

USDC’s depeg in March 2023, caused by exposure to Silicon Valley Bank.
TrueUSD’s fall in January 2025, amid reports of large redemptions into Tether.

Despite these setbacks, stablecoins continue to grow. As of early 2025, the total stablecoin market cap exceeded $200 billion, and annual stablecoin volumes reached $27.6 trillion — surpassing Visa and Mastercard combined.