The memecoin world is a bit of the wild west, if you will. It’s a new digital frontier where billions can be made, or wiped out, in an instant. Recently the Base blockchain—Coinbase’s new layer 2 blockchain—was the scene of a very different but equally hilarious saga. A memecoin that sparked the most extreme speculative mania ever seen on the platform. This incident, dubbed the "Base memecoin meltdown," raises critical questions about the balance between decentralization, user protection, and the inherent risks of investing in these highly volatile assets. GreedyChain.com We’re here to demystify everything that went down, why it’s important, and what you can take away from it.

sUSD Value Drops Below $0.70

In March 2025, a significant event shook the Synthetix ecosystem: its sUSD stablecoin depegged, plummeting below $0.70. This unexpected crash sent shockwaves across the market and a domino effect across the decentralized finance (DeFi) ecosystem. Takeaways The depegging underscored the risks of algorithmic stablecoins and the wider potential for self-destructive market dynamics.

Current Value of sUSD

As of mid-April 2025, the sUSD still had not regained its peg from the depeg. Though actions were being taken to return its peg back to $1, the market idea was still skittish. The present value of sUSD hovers just under half its original peg, showing the extensive work still needed to restore investor trust. The circumstance highlighted the inherent fragility of stablecoins and need for strong forces to hold them stable.

Historical Value Trends

Until this point, sUSD had been somewhat successful in holding a constant value, mirroring the US dollar. As with all algorithmic stablecoins, it was vulnerable to a loss of market confidence and black swan occurrences. Today’s depegging event in March 2025 was a much larger outlier than historical data would suggest. This transformation necessitated a reassessment by specialists of the very mechanisms at play and risk management practices within. The incident served as a vivid reminder of one of the crypto market’s more notable and less pleasant characteristics—its volatility. It showed the importance of ongoing observation and revision.

Reasons Behind the sUSD Depeg

The sUSD depeg was a multi-faceted event caused by a perfect storm of influences. Getting a handle on these concepts is key to grasping why algorithmic stablecoins are so vulnerable, and why defending them from inevitable collapse is often an impossible task.

Market Factors Contributing to the Depeg

Besides market conditions, technical problems or failures of the Synthetix protocol itself likely played a role in the depeg. These could have included:

  • Increased Market Volatility: A surge in overall crypto market volatility created an environment of uncertainty, leading to increased selling pressure on sUSD.
  • Large Sell Orders: Significant sell orders of sUSD on decentralized exchanges (DEXs) exacerbated the depegging, overwhelming the existing liquidity pools.
  • Speculative Attacks: Rumors of potential exploits or vulnerabilities in the Synthetix protocol fueled speculative attacks, further driving down the price of sUSD.

Technical Issues or Failures

Synthetix was able to respond quickly to the sUSD depeg. To repair the peg and regain investor confidence, they implemented an aggressive and multi-pronged plan to restore the peg. The core of this strategy was a two-prong approach of immediate actions to address market stabilization and later long-term actions to prevent future crises.

  • Smart Contract Vulnerabilities: Potential vulnerabilities in the smart contracts governing sUSD could have been exploited, leading to a loss of confidence and a sell-off.
  • Oracle Manipulation: Manipulation of the price feeds used by the Synthetix protocol could have created artificial imbalances, triggering the depeg.
  • Insufficient Collateralization: If the collateral backing sUSD was insufficient to meet redemption demands, it could have contributed to the loss of peg.

Synthetix's Strategy to Address the Situation

Reactions Synthetix quickly took a number of actions in response to the sUSD depeg. These included:

Immediate Actions Taken

Beyond these short term fixes, Synthetix suggested many measures to stop any depegging occurrences in the future. These included:

  1. Increased Liquidity Provision: Synthetix injected additional liquidity into DEXs to increase buying pressure and support the price of sUSD.
  2. Incentivized Arbitrage: Synthetix offered incentives for arbitrageurs to buy sUSD at discounted prices and redeem it for underlying assets, helping to restore the peg.
  3. Communication and Transparency: Synthetix maintained open communication with the community, providing regular updates on the situation and the steps being taken to address it.

Long-term Solutions Proposed

To understand the sUSD depeg, you need to understand Synthetix. So if you’re looking to dive into the DeFi space, it’s important to get used to its sUSD stablecoin.

  • Enhanced Collateralization: Increasing the collateral backing sUSD to provide a greater buffer against market fluctuations.
  • Improved Oracle Security: Implementing more robust oracle mechanisms to prevent price manipulation and ensure accurate price feeds.
  • Smart Contract Audits: Conducting regular audits of smart contracts to identify and address potential vulnerabilities.

Overview of Synthetix and sUSD

Like many DeFi projects, Synthetix is a decentralized synthetic asset issuance protocol that’s been built on Ethereum. Users are able to mint and exchange synthetic assets, or Synths. These assets closely mirror the prices of tangible, real-world goods such as company shares, hard assets, and fiat currencies. Synthetix’s mission is to provide universal access to all of the world’s assets without traditional intermediaries. The platform includes a creative built-in staking mechanic. SNX token holders can collateralize the system and through this process they can earn rewards for providing liquidity.

What is Synthetix?

sUSD is Synthetix's USD-pegged stablecoin. To accomplish this, it tries to maintain a market value of $1. That allows it to serve as the primary asset for trading Synths on the Synthetix exchange. sUSD is minted by staking SNX tokens as collateral. Users can subsequently use sUSD to buy other Synths or engage in a plethora of DeFi activities. This volatility control of sUSD is incredibly important to the functionality of the larger Synthetix ecosystem.

Understanding sUSD and Its Purpose

Our “Base is for Everyone” narrative went off the rails. One memecoin project allegedly conned new investors out of a jaw-dropping $15 million. This blow was anything but small. … served as a timely wakeup call that highlighted the many risks that lie below the surface of the open, permissionless world that we call Web3. The incident has triggered debates about the responsibilities of platforms like Coinbase and Zora Create, and the impact of whale manipulation on retail investors.

As mentioned previously, Coinbase’s key advantages are their huge user base and established reputation. It’s doing this by actively promoting its Layer 2 network, Base, as a center for innovation and accessibility. Zora Create provides a user-friendly, no-code platform for creators to mint and launch their NFTs and social tokens. This platform is based on Base, making web3 more accessible to all. Unfortunately for us, that ease of access can be turned against us by malicious actors, as we’ve seen recently with the memecoin exploit.

The incident unfolded rapidly. One memecoin released on Base using Zora Create has recently blown up. Investors are lining up to it, salivating at the thought of getting in on the ground floor. It didn’t take long for the reality of the project to be revealed. Insider trading and price manipulation allegations followed immediately after. This resulted in a dramatic “rug pull,” in which the project’s developers allegedly drained the liquidity pool, leaving investors holding thousands of dollars’ worth of worthless tokens.

The incident raises several important questions. If USDT isn’t a legitimate project, then was Coinbase itself negligent by letting a project like this rise to the top of its platform? Did Zora Create have sufficient protections against bad faith actors abusing its tools for harm? How much did whale manipulation contribute to the increase of the memecoin price? Did it play a role in the disastrous rug pull that ensued shortly thereafter?

Coinbase’s long-term vision is for a decentralized and permissionless future. Critics argue that the platform has a responsibility to do more by protecting its users from scams and fraudulent projects. Zora Create has taken a beating for its lackluster vetting procedures. Many are afraid that it will be used as a tool to do the most harm.

The “Base memecoin meltdown” is a prime example of what potentially awaits retail investors who are eager to dip their toes into the memecoin pool. These assets are incredibly risky, speculation and hype fueled—not built on fundamental value. As with any investment, investors should do their own diligence and understand the associated risks. At the same time, they need to be careful of projects that over-promise returns.

The “Base memecoin meltdown” highlights the still present fight between decentralization and protecting the user. This challenge has only been compounded in the rapidly evolving Web3 space. While platforms like Coinbase and Zora Create strive to create open and accessible ecosystems, they must take steps to mitigate the risks of scams and fraudulent activities. It’s a dangerous world out there, and individual investors need to be careful. They need to be able to do their own research and make educated decisions as they traverse the memecoin wild west. At GreedyChain.com, we’re dedicated to watching over these developments. We’re going to bring you all the insights you need to keep you at the head of the Web3 pack.

Here are some actionable tips for navigating the memecoin mania:

  • Do Your Own Research (DYOR): Don't rely solely on social media hype or influencer endorsements. Investigate the project's team, whitepaper, and community.
  • Understand the Risks: Memecoins are highly volatile and prone to pump-and-dump schemes. Be prepared to lose your entire investment.
  • Diversify Your Portfolio: Don't put all your eggs in one basket. Spread your investments across a variety of assets.
  • Use Stop-Loss Orders: Protect your capital by setting stop-loss orders to automatically sell your tokens if the price drops below a certain level.
  • Be Wary of "Get Rich Quick" Schemes: If it sounds too good to be true, it probably is. Avoid projects that promise guaranteed profits or unrealistic returns.

The "Base memecoin meltdown" highlights the ongoing challenges of balancing decentralization with user protection in the rapidly evolving Web3 space. While platforms like Coinbase and Zora Create strive to create open and accessible ecosystems, they must also take steps to mitigate the risks of scams and fraudulent activities. Ultimately, it is up to individual investors to exercise caution, do their own research, and make informed decisions when navigating the wild west of memecoins. GreedyChain.com will continue to monitor these developments and provide you with the insights you need to stay ahead in the Web3 game.