Synthetix Founder Warns SNX Stakers to Embrace New Mechanism or Face ‘The Stick’

Synthetix founder Kain Warwick has issued a stern message to SNX stakers, urging them to adopt the protocol’s newly launched staking mechanism aimed at restoring the dollar peg of its stablecoin, sUSD.

In an April 21 post on X, Warwick made it clear that if voluntary participation fails, stronger measures may follow.

The sUSD 420 Pool, introduced on April 18, offers stakers a share of 5 million SNX tokens over a 12-month period if they lock their sUSD in the pool for a full year.

The goal is to reduce circulating sUSD and help restore the token’s $1 peg.

However, Warwick admitted the mechanism is currently “very manual” and lacks a user-friendly interface—though one is in development.

Once the UI goes live, Warwick warned that if participation remains low, pressure on SNX stakers will increase.

“We tried nothing, which didn’t work. Now we’ve tried the carrot, and it kind of worked—but I’m reserving judgment,” he said. “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.”

Synthetix’s sUSD is a crypto-collateralized stablecoin backed by locked SNX tokens, meaning its price stability depends heavily on the performance and market confidence in SNX.

Since the start of 2025, sUSD has faced repeated instability. On April 18, it fell to $0.68, a 31% drop from its intended $1 peg. As of April 21, it had recovered slightly to $0.77, according to CoinGecko.

Warwick noted that the solution lies with 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.”

Synthetix’s latest changes stem from SIP-420, a proposal that shifts debt risk from individual stakers to the protocol itself.

Depegs in the stablecoin space are not uncommon. USDC briefly lost its peg in March 2023 after Circle revealed $3.3 billion in reserves were stuck with the collapsed Silicon Valley Bank.

Similarly, TrueUSD (TUSD) dropped below $1 earlier this year amid a wave of redemptions.

Despite the challenges, the stablecoin sector has grown steadily, with total market capitalization surpassing $200 billion in 2025 and transaction volume hitting $27.6 trillion—exceeding the combined annual volume of Visa and Mastercard.

In March, Federal Reserve Chair Jerome Powell affirmed the central bank’s support for developing a regulatory framework around stablecoins during a Senate hearing.

Powell stated that the Federal Reserve supports the creation of a regulatory framework for stablecoins, noting the importance of protecting consumers and savers.

Earlier this month, the U.S. House Financial Services Committee approved the advancement of a stablecoin bill that seeks to establish clearer regulations for the sector.

Known as the Stablecoin Transparency and Accountability for a Better Ledger Economy Act, or the STABLE Act, the legislation passed out of committee on Wednesday with 32 votes in favor and 17 opposed.

The bill, introduced by Committee Chair Rep. French Hill (R-Ark.) and Rep. Bryan Steil (R-Wis.), seeks to establish a comprehensive framework for the issuance and oversight of dollar-pegged stablecoins.

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