sUSD price prediction: Synthetic token keeps peg during volatility

Heavily collateralised stablecoin fell 23% in market capitalisation, beating wider crypto trends

Folder icon with “derivatives” spelled out – Photo: Shutterstock                                 
Synthetix provides a range of fiat and crypto derivative products – Photo: Shutterstock
                                

Contents

What is sUSD?

The crypto-backed stablecoin sUSD (SUSD) is issued by Synthetix, the decentralised finance (DeFi) platform launched in 2017 by Sydney-based founder Kain Warwick. Synthetix deals in derivatives and synthetic assets. As a synthetic asset pegged to the dollar, SUSD provides price exposure to the US dollar, while also giving holders access to DeFi trading opportunities using a price-stable cryptocurrency.

SUSD is one of a number of stablecoins issued by Synthetix, with other options covering the gamut of fiat currencies, cryptocurrencies and even an index fund.  Some, but not all, of Synthetix’s derivatives are built using the Ethereum’s Optimism Layer-2 protocol. Since SUSD is one such option, it benefits from substantially reduced gas fees.

SUSD makes use of Chainlink’s pricing oracles to track the price of the US dollar. While stablecoins have come under intense scrutiny in 2022, following the collapse of the Terra USD stablecoin – now rebranded to TerarClassicUSD (USTC) – and subsequent depeggings of others, SUSD has so far remained unscathed. But what is SUSD’s future looking like? Read our SUSD coin price prediction to find out.

How is SUSD collateralised?

SUSD is collateralised by a pool of Synthetix Network Tokens (SNX). Synthetix offers numerous stablecoins and other synthetic assets, including a synthetic euro (SEUR), synthetic Australian dollar (SAUD) and a synthetic Ether (SETH). All of these derivatives are backed by the same SNX liquidity pool, with liquidity providers receiving annual percentage yield (APY) rewards paid out in SNX.

Having a shared collateral pool among all of Synthetix’s derivatives makes for a frictionless trade between assets without the need for a middleman, although exchange fees (approximately 0.3%) and gas fees do apply. SUSD is by far the most popular derivative on the platform, comprising 86% of the total circulating volume.

Pie chart of active derivatives on Synthetix
SETH is the second most popular derivative on Synthetix – Source: grafana.synthetix.io

Synthetix has a particularly high collateralisation ratio for anyone wanting to open a borrowing position. The initial ratio was set at 400%, before the community voted to lower the ratio to 300%. Subsequent proposals once again raised the ratio to 350%, while an active proposal due 25 June seems likely to raise the ratio back to 400%.

The sum of Synthetix’s derivatives are currently collateralised at an active ratio of 327% (as of 24 June). Debt can also be borrowed against Ether for a much lower ratio of 150%, but this option does not generate any staking rewards.

Screenshot of governance proposal to raise target staking ratio back to 400%
SCCP-205 proposes to return target staking ratio to the original 400% – Source: grafana.synthetix.io

SUSD: The key trading figures

SUSD has a trading volume of 98,676,079 – as of 24 June 11:00 BST (UTC +1) – theoretically making for an equal market capitalisation. However, since the SUSD price is slightly below peg at $0.9931, the market cap varied from the exact circulating volume and currently sits at approximately $97.9m.

SUSD’s popularity peaked in August 2021, when its market capitalisation exceeded $330m on the 24 August. Although that figure has reduced by more than 70%, short-term activity has not been so bearish.

Between 1 January and 24 June, SUSD’s market capitalisation reduced by 23%, In comparison, the entire cryptocurrency market capitalisation in this time period fell by 57%, according to CoinMarketCap. But comparing SUSD with Tether (USDT), the world’s largest stablecoin, SUSD fell 8.5 percentage points more than USDT’s 14.5% reduction.

The SUSD crypto ranks as the 17th largest stablecoin by market capitalisation, below STASIS EURO (EURS) and above StraitsX Singapore Dollar (XSGD).

SUSD price prediction

As a stablecoin, an SUSD price prediction should theoretically always be $1, despite incremental intraday fluctuations, whether its an SUSD price prediciton for 2022, an SUSD price prediction for 2025 or an SUSD price prediction for 2030.

This is, of course, contingent on the health of the project. A severe drop in market capitalisation or staking volumes of the SNX collateral token could cause SUSD to depeg. Therefore, traders interested in using SUSD to gain exposure to the US dollar are advised to research the underlying fundamentals of the token and the Synthetix enterprise.

Still asking yourself, what is a stablecoin? Currency.com has a range of resources for you:

FAQs

SUSD is a stablecoin issued by derivatives platform Synthetix. SUSD is collateralised by a pool of Synthetix’s SNX token. SUSD provides price exposure to the US dollar, while also giving holders access to DeFi trading opportunities using a price-stable cryptocurrency.

As a US dollar-pegged stablecoin, SUSD should not go above or below $1, barring slight intraday fluctuations. All SUSD price predictions therefore should be set at $1.

There are currently 98,676,079 in circulation.

SUSD can be used to access US dollar price discovery. Since it is pegged to the dollar, it does not provide investment potential. Traders seeking to invest in Synthetix should look to the SNX token for staking opportunities. Be aware that your capital is at risk. Never put down more than you can afford to lose.

Further reading

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