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One of the top cryptocurrency exchanges in South Korea, Upbit, has revealed that the Digital Asset eXchange Alliance (DAXA) has classified SNX, the native token of the Synthetix protocol, as a “investment warning asset.”
This decision comes after SNX’s market behavior became more volatile and the sUSD stablecoin, which is intimately linked to the Synthetix ecosystem, failed to maintain its intended 1:1 peg with the US dollar.
Upbit Suspends SNX Deposits
Upbit will suspend SNX deposits as a direct consequence of this classification, effective April 24 at 15:00 KST.
DAXA, a group of significant South Korean exchanges that work together to evaluate and control potentially high-risk digital assets, made the move as part of a larger risk management initiative.
Since sUSD is a vital part of the Synthetix ecosystem’s infrastructure for synthetic assets, the depegging of sUSD has sparked worries about the ecosystem’s overall stability.
Together with notable swings in SNX’s price, the circumstance has made investors and exchanges cautious.
Also Read: Bithumb and Upbit Announce The Delisting of HIFI, $HIFI Token Dropped By 9%
Upbit Urges Users to Monitor Deadlines
Users are encouraged by Upbit to keep an eye on official notifications and make sure they don’t try to deposit SNX after the deadline.
Whether SNX is still marketable or subject to new platform restrictions will be determined by further assessments.
After attentively monitoring the sUSD stablecoin’s price changes, Upbit had determined that it is still unable to sustain its planned peg to the US dollar.
The accompanying coin, SNX, which is directly tied to sUSD via the Synthetix protocol, is a cause for concern given this continuous instability.
The price of SNX may become extremely volatile as a result of this relationship, putting investors at greater risk of experiencing abrupt and erratic losses.
Upbit has taken preventative measures to reduce any harm since it views this unresolved issue as a danger to investor safety.
By highlighting assets that present increased risks because of market anomalies or failure to achieve anticipated stability requirements, the exchange demonstrates its dedication to upholding a safe trading environment.
Why is sUSD Loosing Market Momentum?
The primary reason for the sUSD stablecoin’s declining market traction is its persistent inability to sustain a steady 1:1 peg with the US dollar.
Since consumers anticipate price consistency from stablecoins, this volatility erodes trust. Decreased demand has also been a result of limited liquidity and decreased utilization within the Synthetix ecosystem.
The market presence of sUSD is further constrained by competition from more well-known and reliable stablecoins like USDT and USDC.
Lower trading volumes and decreased adoption across DeFi applications and exchanges result from platforms and investors becoming more cautious as volatility continues and confidence declines.
Also Read: Upbit Flags HIFI As Trading Risk Following DAXA Designation, $HIFI Slips By More Than 12%