Kain Warwick, the founder of Synthetix, has sent a clear warning to SNX stakers, encouraging them to engage with the platform’s newly unveiled staking mechanism designed to help stabilize the dollar peg of its stablecoin, sUSD.
In a message shared on X on April 21, Warwick stated that should participation in the initiative remain insufficient, more forceful measures could be considered in the future.
The recently launched sUSD 420 Pool, which began on April 18, promises stakers a portion of 5 million SNX tokens over the course of a year, if they commit to locking their sUSD in the pool for the full twelve months.
New Staking Mechanism Aims to Restore sUSD’s $1 Peg by Reducing Supply
The primary objective of this mechanism is to diminish the circulating supply of sUSD, consequently aiding in the restoration of the token’s $1 peg.
Warwick acknowledged that the process presently operates in a “very manual” fashion and lacks an intuitive user interface, though an upgraded version is underway.
He cautioned that if participation remains low once the new interface launches, the pressure on SNX stakers may escalate.
“We tried nothing, which didn’t work. Now we’ve tried the carrot, and it kind of worked—but I’m reserving judgment,” he remarked. “I think we all know how much I like the stick.”
“I think we all know how much I like the stick, so if you think you will get away with not eating the carrot, I’ve got some bad news for you.”
— kain.depeg (@kaiynne) April 21, 2025
Synthetix’s sUSD operates as a crypto-collateralized stablecoin, reliant on locked SNX tokens for its price stability, making its market performance closely tied to both SNX’s value and public confidence in it.
Throughout 2025, sUSD has encountered multiple episodes of volatility. On April 18, the stablecoin dropped to $0.68, representing a 31% decline from its target value of $1. However, it had marginally recovered to $0.77 by April 21, according to data from CoinGecko.
Warwick emphasized that the key to resolving these issues lies within the community: “The collective net worth of SNX stakers is in the billions. The money to solve this is there—we just need to dial in the incentives.”
The recent adjustments to Synthetix are a result of SIP-420, a proposal that reallocates debt risk from individual stakers to the protocol itself.
Stablecoin Depegs Remain a Recurring Challenge
Instability among stablecoins is not a new phenomenon. For instance, USDC briefly lost its peg in March 2023 following reports that $3.3 billion in reserves were frozen with the collapsed Silicon Valley Bank.
Similarly, TrueUSD (TUSD) faced a decline below $1 earlier this year amid a surge in redemptions.
Despite these challenges, the stablecoin sector has experienced consistent growth, with its total market capitalization eclipsing $200 billion in 2025 and transaction volume reaching $27.6 trillion—surpassing the combined annual volumes of Visa and Mastercard.
During a Senate hearing in March, Federal Reserve Chair Jerome Powell reiterated the central bank’s commitment to establishing a regulatory framework for stablecoins, highlighting the necessity of consumer protection and financial stability.
Furthermore, earlier this month, the U.S. House Financial Services Committee moved forward with a stablecoin bill intended to clarify regulations within the sector. The legislation, known as the Stablecoin Transparency and Accountability for a Better Ledger Economy Act, or the STABLE Act, successfully passed out of committee with a vote of 32 in favor to 17 opposed.
Introduced by Committee Chair Rep. French Hill (R-Ark.) and Rep. Bryan Steil (R-Wis.), the bill aims to create a comprehensive oversight and regulatory framework for the issuance of dollar-pegged stablecoins.
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