A sensing system for sensing degradation of a machine fluid is disclosed. The sensing system may comprise a capsule including a dissolvable element. The dissolvable element may be configured to at least partially dissolve when placed in contact with the machine fluid having an acid content indicative of degradation of the machine fluid. The sensing system may further comprise a tracer encapsulated by the capsule. The tracer may be at least partially released from the capsule when the dissolvable element at least partially dissolves.