There is already a permissionless stablecoin backed by permissionless collateral. Why are they attempting to do this when there is already a crypto-native stablecoin with a decentralization path? The answer to these exciting questions is that sUSD is perfectly positioned for this moment in the evolution of DeFi. DAI is not going anywhere, at least soon, so it's time to elevate sUSD as the permissionless alternative with the highest commitment to decentralization values.
However, it's not just about the principles. sUSD, in its contemporary form, is structurally more powerful and, most importantly, much more useful than DAI. Synthetix introduces a USD-denominated ETH collateral, a feature familiar in many ways to Maker CDP owners, and the value proposition will change overnight. This feature will not only bring more utility to the trader but will also expose a critical advantage that sUSD has over DAI as a stablecoin. First, the sUSD will be many times more potent than DAI. sUSD has a native use case on the Synthetix system unmatched in Maker. In other words, sUSD is poised to own DAI's most important use case, and when the dust settles, the utility gap will have widened.
The sUSD parity is much better equipped than DAI to absorb the massive issuance that traders generate leverage. When CDP owners mint DAIs to buy more ETH, they immediately re-sell DAIs on the open market. As they create power, more and more DAI floods Uniswap and Oasis, bringing parity below $ 1. When a trader converts sUSD to sETH or sBTC or iETC on the Synthetix Exchange, the system burns it and no longer exists. When traders deploy their synthetic capital, the link becomes stronger. Of course, DAI (Multi-Collateral DAI) is still roughly 15 times larger in market capitalization and many broader shared minds. But it's hard to look at each project's trajectory and not conclude that DAI and sUSD are at least equally positioned in the decentralized stablecoin space.