Synthetix, a decentralized derivatives protocol, has seen its core contributors Kain Warwick and Benjamin Celermajer jointly submit SIP-423, a proposal to phase out the stablecoin sUSD and overhaul the SNX staking mechanism. The proposal covers the freezing of sUSD, a conversion plan, debt model restructuring, and a revenue allocation mechanism, signaling a significant evolution for the Synthetix ecosystem.
Freezing sUSD and Launching a Swap Plan
The proposal calls for freezing sUSD on Ethereum mainnet and Optimism, halting transfers, minting, and burning, and taking a snapshot of all holders. Eligible holders can swap their sUSD for newly minted SNX at a rate of 1 sUSD = 4 SNX, with the SNX subject to a 1-year lock-up followed by a 1-year linear release. This arrangement is designed to gradually convert legacy stablecoin holdings into the protocol's native asset while minimizing market disruption.
Major Staking Mechanism Reforms
SIP-423 eliminates the previous requirement to maintain a specific sUSD staking ratio. Outstanding debt will be migrated to a new staking model with a 4-year lock-up plus a 1-year linear release, though participants can exit early by fully repaying their debt. Furthermore, staking is completely decoupled from legacy sUSD obligations — stakers no longer need to hold or stake sUSD. This lowers the barrier to participation in SNX staking without reliance on the old stablecoin.
To incentivize legacy holders, the proposal stipulates that if the protocol generates over $10 million in revenue within two years, 25% of that revenue will be distributed to legacy sUSD holders in USDT. The specific parameters can be adjusted through Synthetix's SCCP governance mechanism. The proposal is now open for community discussion and must pass a governance vote before implementation.