The issue is due to the mechanism change of SIP-420 in the sUSD off-anchor system, not a bad debt problem

According to Parsec's analysis, the recent depegging of Synthetix stablecoin sUSD was not due to bad debt or protocol failure, but a side effect brought about by adjustments in the SIP-420 mechanism. SIP-420 introduced a shared debt pool mechanism where SNX pledgers no longer mint sUSD individually and bear personal debts, but delegate funds to a public pool, achieving a structure without liquidation or personal debt. However, when the price of sUSD deviates from its pegged value, pledgers no longer have an incentive to repurchase sUSD at low prices to repay their debts, causing the original self-regulation mechanism of the protocol to fail. At the same time, over 80 million dollars worth of SNX flowed into the SIP-420 pool coupled with Infinex activities driving position growth led to rapid expansion in sUSD supply while market demand lagged behind putting further pressure on its pegging mechanism.

Currently, sUSD has fallen to $0.87 USD with a depegging range exceeding 13%. The Synthetix team stated that they are rebuilding demand for sUSD through integration with Aave and Ethena as well as strengthening Curve incentives among other methods.