SIP-423: sUSD Retirement & Staking Reform

Simple Summary

This SIP proposes retiring legacy sUSD, restructuring the Debt Jubilee, and reforming SNX staking to establish a sustainable long-term foundation for Synthetix.

This SIP achieves two primary outcomes:

1. Sunsetting of sUSD on Ethereum mainnet and Optimism. sUSD will be wound down and converted to newly minted SNX on Ethereum Mainnet.
2. Restructuring of the 420 Pool Debt Jubilee and SNX staking.

Abstract

sUSD and the Debt Jubilee (SIP-420, SIP421) continue to impose cost, complexity, and misaligned incentives between legacy models and the new Synthetix Exchange. sUSD trades below peg and Jubilee participants face escalating sUSD staking requirements, both of which continue to hinder growth of the Synthetix Exchange.

This SIP proposes the sunsetting of sUSD and restructuring of the remaining debt jubilee through the following four components:

1. Holder snapshot - audit of sUSD holders on Ethereum and Optimism at a governance-defined cutoff block.
2. sUSD retirement - Freeze sUSD and deprecate the contract (reducing supply to zero). Before the 1 year lock completes, a receipt contract will be deployed and seeded from the snapshot, where sUSD at $1 value will be redeemed for 3.333 SNX on Ethereum Mainnet (1 year lock + 1 year vest from the time of freeze).
3. Debt Jubilee restructure - modification of the 420 Pool Jubilee (SIP-420, SIP-421) to remove the sUSD staking ratio requirement, close the program, and resolve existing participant debt under new terms: a 4-year lock with 1-year vest, or early exit by repayment of remaining debt.
4. SNX staking reform [BUILD DEFERRED] - transition of the 420 Pool to a reformed staking model in which SNX staking is no longer coupled to legacy sUSD holdings or peg-restoration requirements.

Together, these measures sunset sUSD, resolve the Jubilee overhang, and align SNX staking with the protocol's post-redesign direction: Perps on Ethereum Mainnet, basis-trade vault collateralisation, and protocol-directed stablecoin management rather than staker-backed debt.

Specification

Overview

The program executes in four phases. Phases 1–2 are sequential; phases 3–4 will be developed in the months should this SIP receive approval.

Phase	Action	Outcome
1	Restructure Debt Jubilee and debt terms	Debt retained under lock/vest or repaid to exit
2	Suspend legacy sUSD and take holder snapshot	Definitive entitlement registry at cutoff block
3	Deploy receipt contract; mint and distribute new sUSD [CONTRACT BUILD DEFERRED]	Legacy sUSD retired; eligible holders converted
4	Reform SNX staking operations [CONTRACT BUILD DEFERRED]	Staking decoupled from legacy sUSD and peg duties

Phase 1: Debt Jubilee Restructure and Debt Terms

The 420 Pool Debt Jubilee (SIP-420, SIP-421) shall be restructured as follows.

Pause existing Jubilee Mechanisms

• The existing 12-month linear debt-burn mechanism (SIP-420) and associated early-exit penalty schedule (SIP-421) are deactivated upon SIP activation. No further debt forgiveness accrues under the legacy Jubilee model.
• The sUSD staking ratio requirement (currently up to 100% of original debt) is removed and sUSD is returned to holders.
• Jubilee participants are no longer required to hold legacy sUSD to maintain debt forgiveness progress.
• Remaining debt yet to be jubileed will be carried forward into the new staking contract.

420 Pool Wind-Down.

Funds in the 420 pool will be returned to the pDAO and distributed as follows:

• All sUSD returned to the pDAO will be returned to holders within 24 hours.
• All SNX that doesn’t have any debt will also be returned to holders within 24 hours.

All SNX that still has debt will be held by the pDAO to prepare for the new SNX staking contract (Phase 4).

Phase 2: Legacy sUSD Suspension and Holder Snapshot

7 days after successful voting, the pDAO shall:

• Suspend legacy sUSD transfers, minting, and burning on Ethereum mainnet (chain 1) and Optimism (chain 10).
• Record a snapshot at the suspension block of all sUSD holders.
• Retire legacy sUSD by deprecating the contract.

Integrators:

• Once sUSD is retired, sUSD held in LP pools, vaults or other deposit contracts cannot be recovered by claimants.
• A separate Treasury claims process will allow holders to recover entitlements by surrendering the relevant deposit or LP receipt tokens. Each claim will be evaluated individually, according to the underlying protocol’s mechanics and the conditions under which the sUSD can be released or redeemed.

Phase 3: Legacy sUSD Retirement and New SNX Minting

Receipt Contract [CONTRACT BUILD DEFERRED]

Deploy a LegacySUSDReceipt (or equivalent) contract on Ethereum mainnet that:

• Is seeded at deployment with eligible addresses and claims from the snapshot.
  • Gnosis safe holders on L2 will need to contact Synthetix to nominate a deposit address on Ethereum Mainnet.
• Allows eligible holders to claim new SNX at a conversion ratio derived from valuing sUSD at $1 and SNX at the 30 day twap price per Coingecko.
• Burns or otherwise retires the holder's legacy sUSD upon claim.
• Any unclaimed receipts after 6 months will expire worthless.

New SNX Minting

The protocol shall mint new SNX to retire sUSD and honour receipt claims.

Parameter	Initial Value
Conversion Ratio	3.333 SNX per 1 sUSD entitlement
Minting Authority	pDAO via designated issuer
Maximum Mint	Total eligible entitlement from snapshot

Phase 4: SNX Staking Reform [CONTRACT BUILD DEFERRED]

Phase 4 governs operational changes to SNX staking.

Decouple Staking from Legacy sUSD Obligations

SNX staking shall no longer require stakers to hold, stake, or acquire sUSD as a condition of participating in SNX staking and receiving their Jubilee. Specifically:

• Stakers are not obligated to acquire legacy sUSD for peg maintenance or to preserve jubilee status.
• sUSD held by stakers is distributed (Phase 1) and will be converted to SNX via the receipt mechanism (Phase 3). Debt itself persists under Phase 3 until repaid, or cleared at the end of the lock/vest schedule.
  • Stakers who elect to continue partaking in the Jubilee will clear debt over 4 years, at which stage all their SNX will become liquid during a 1-year vest period.
  • Stakers can elect to early exit from the lock/vesting phase by repaying their full debt balance (as snapshot in Phase 1) to the Synthetix Treasury.
• The 7-day unstaking cooldown remains for all participants.

Execution Timeline

Milestone	Target	Dependency
SCCP: snapshot cutoff block and suspension	T+0	SIP approval
sUSD returned	T+1 day	420 snapshot and SIP approval
sUSD snapshot execution and publication	T+7 days	sUSD Suspension
Governance review of snapshot outputs	T+7 to T+14 days	sUSD snapshot
Publication of sUSD snapshot	T+14 days	sUSD snapshot
Claims contract deployment and seeding	TBC
Claim window opens	T+365 days	Claims contract deployment
SNX with no debt returned	T+1 day	420 snapshot and SIP approval
Jubilee restructure and debt terms activation	T+1 day	SIP approval (concurrent)
Governance review of snapshot outputs	T+7 to T+14 days	420 snapshot
Publication of SNX and remaining debt to be jubileed	T+14 days	420 snapshot
Staking reform contract launch	TBC	New SNX staking contract

Configurable Values (Via SCCP)

Parameter	Initial Value	Description
Snapshot cutoff block	Suspension block	Pin per chain at activation
sUSD:SNX Conversion ratio	1:3.333	New SNX per legacy sUSD entitlement
Debt lock period	4 years	Duration debt position remains locked (Phase 3, continue jubilee path)
Debt vest period	1 year	Linear vest after lock before debt clearance (Phase 3, continue jubilee path)
Early exit condition	Repay remaining debt in full	Condition for leaving before lock/vest completion (Phase 3, early exit path)
Staking reform deadline	TBD	Last date for solo staker migration or debt repayment
Unclaimed sUSD entitlement treatment	TBD	Forfeiture, extension, or treasury recovery

Copyright

Copyright and related rights waived via CC0.