sUSD, formerly known as nUSD, is issued by the Havven Foundation. It will be created directly in the issuer’s wallet, and will be used to increase liquidity by paying a fee proportional to the number of nominations posted by each user. The stability of sUSD is maintained by the foundation's direct market intervention.
Project Introduction
Synthetix is a decentralized synthetic asset issuance protocol based on Ethereum. These synthetic assets are guaranteed by the Synthetix network token (SNX), and as long as SNX is locked in a smart contract, synthetic assets (Synths) can be issued. The staking pool model enables users to perform conversions between Synths directly using smart contracts without the need for a counterparty.
sUSD pegs
sUSD pegs are critical to a well-functioning system, as traders need liquidity and stability between sUSD and other crypto assets in order to gain profit. sUSD is traded on the open market, so it has the potential to fall below parity with the U.S. dollar. Incentives are needed to ensure that the price deviation of the peg is minimal, and SNX holders have an incentive to correct the price deviation through arbitrage.
The main mechanism to keep sUSD pegged is that SNX stakers create debt and sell their minted Synths, reduce the debt by repurchasing and burning sUSD below its face value, up to purpose of arbitrage. There are other ways to maintain this peg, including increasing the staking rate, thereby reducing the supply of Synths to match demand. Introducing liquidation is another option for failing to maintain the sUSD peg. These scenarios can only be implemented after the community has debated them through our SIP process (discussed next).
Current Synths
There are currently four categories of Synths available: Fiat, Commodities, Crypto, and Inverse Crypto. Our fiat currency Synths include sUSD, sEUR, sKRW and more.
