Synthetix's Spartan Council passed SIP-423 on June 23, formally retiring sUSD and committing to compensate holders at $1 face value in newly minted SNX, per Value The Markets. Founder Kain Warwick and core contributor Benjamin Celermajer authored the SIP. The vote is the first time a major DeFi protocol has formally wound down its own synthetic stablecoin rather than defending the peg.

sUSD hit an all-time low of $0.2250 on June 23 and was trading at $0.2897 as of June 25, per CoinGecko, with 44.17 million tokens in circulation across Ethereum and Optimism. The proposal values the full outstanding supply at $1 face value: a commitment of approximately $44 million in SNX at the SIP's implied reference price of $0.25 per token.

Under the SIP, a snapshot of all sUSD balances on Ethereum and Optimism is taken seven days after the vote at a governance-defined cutoff block. Holders receive 4 SNX for each dollar of face value. Those tokens lock for one year, then vest linearly over the following year. Claims open roughly one year after the freeze; unclaimed receipts expire six months after deployment. Holders on Optimism and Gnosis Safe L2 addresses must nominate a mainnet Ethereum address before the cutoff.

SIP-423 also includes a contingent USDT path: if Synthetix generates more than $10 million in protocol revenue within the two-year lockup, 25% of that revenue may be distributed as USDT at 1:1 to holders who elect it. The Spartan Council can adjust both thresholds via a Synthetix Configuration Change Proposal (SCCP).

The depeg traces to SIP-420, an earlier governance upgrade that consolidated SNX staking into a single protocol-owned pool. Individual stakers previously managed personal debt positions with a direct incentive to buy underpriced sUSD to retire that debt cheaply. The shared pool removed that mechanism: once debt was socialized, no single participant gained from defending the peg. Analysis from Parsec, as reported by crypto.news, identified the loss of individual "skin in the game" as the proximate cause.

The vote required four of seven Spartan Council members to approve.