Synthetix Proposes Adjusting Incentive Mechanism to Restore sUSD Peg and Promote L1 and Perps V4 Development

Background: On April 23, 2024, Kain, the founder of Synthetix, published a blog titled "sUSD: Restarting the Pegging Path," detailing plans to adjust incentive mechanisms, restore the $sUSD peg, and lay the foundation for Perps V4 on both L1 and snaxChain.

Main Content:
1. After the $SNX price fell below $1 at the end of 2024, Synthetix launched a "debt forgiveness" program, consolidating historical $sUSD debt into an on-chain 420 pool. This avoided a liquidation crisis but disrupted the arbitrage peg mechanism of sUSD.
2. To restore the $sUSD peg to $1, a reintroduction of incentives was proposed: positive incentives involve staking $sUSD into the 420 pool to earn $SNX inflation rewards; negative incentives require stakers to deposit a certain percentage of $sUSD (initially 5-10% of outstanding debt), with failure to meet this resulting in suspension of debt forgiveness and an increase in the required ratio.
3. Optimization of the staking model includes implementing $SNX pooled staking, creating a new 420 pool that accepts new collateral assets, expanding $sUSD supply without liquidation risk. Initially, USDC will be included, with potential expansion to other DeFi tokens in the future.
4. Four coordinated initiatives: gradual phase-out of the old v2/v2x systems, integration of debt and liquidity into the new staking pool; launch of Perps V4 on Ethereum mainnet supporting multi-collateral and off-chain order matching; introduction of options and perpetual contract markets on the dedicated Superchain application chain snaxChain; additional minting of 170 million $SNX as an incentive pool, bringing total supply to 500 million, with new tokens deployed on snaxChain exclusively for incentives.

Potential Impact: This plan aims to restore $sUSD peg stability, optimize staking and incentive mechanisms, promote upgrades and expansion of the Synthetix ecosystem, and enhance user confidence and market activity.