DeFi Platform Elixir Stops Supporting deUSD After Stream Finance’s $93M Loss

Decentralized finance (DeFi) liquidity provider Elixir has decided to stop supporting its synthetic stablecoin, deUSD, due to the repercussions of Stream Finance's significant $93 million loss reported earlier this week.

Key Takeaways:

Elixir suspended its deUSD stablecoin following the $93 million loss at Stream Finance, which caused deUSD to drop to approximately $0.015.
A leveraged position from Stream, which owes Elixir $68 million, resulted in a 90% crash of its own stablecoin, XUSD.
Balancer experienced a $128 million exploit but managed to recover $19 million.

Elixir announced via social media platform X that it has processed redemptions for 80% of deUSD holders, which contributed to the token’s devaluation to around $0.015, based on CoinGecko data.

DeFi Platform Elixir Halts Support for deUSD After Stream Finance’s $93M Loss

Stream’s XUSD Plummets 90% as deUSD Exposure Spreads

Stream Finance had utilized deUSD to support its own Staked Stream USD (XUSD) stablecoin, which dropped to $0.10 following this news.

Launched in July 2024, Elixir’s deUSD was positioned to compete with Ethena's USDe and had a market cap of roughly $150 million prior to the downturn.

According to Elixir, approximately 90% of the remaining deUSD supply, valued at around $75 million, is held by Stream. However, Stream has neither repaid this amount nor closed its positions.

Now, Elixir is working with other DeFi protocols such as Euler, Morpho, and Compound to fully compensate the affected holders.

Elixir expressed optimism, stating, “We still believe this will be honored 1 for 1,” and highlighted that they disabled withdrawals to stop Stream from liquidating deUSD before addressing its debt.

Interestingly, on-chain analysts characterized the decline of XUSD as a loss of confidence, rather than a technical problem, pointing out that most of the trading activity was on Arbitrum, and no exploit of the smart contract had been found.

Growing discussions on social media raised alarms regarding Stream's reserves, with some users alleging a discrepancy between a $170 million asset base and $530 million in loans, implying significant leverage.

Founded in early 2024, Stream experienced rapid growth based on promises of capital-efficient DeFi strategies, integrating traditional financial practices like hedged market-making and yield farming.

However, its reliance on external fund managers, intended to manage overflow beyond its internal capacity, is now under scrutiny, prompting discussions about transparency and counterparty risk in its operations.

Balancer Faces $128M Exploit but Reclaims $19M

In recent reports, the DeFi protocol Balancer was hit by a severe breach on Monday, affecting its V2 Composable Stable Pools with losses exceeding $128 million across multiple blockchains, according to PeckShieldAlert.

The attacker exploited flaws in authorization and callback processes to rapidly drain funds from interconnected pools.

Analysts from Nansen and Cyvers Alerts monitored suspicious transfers involving WETH, osETH, and wstETH, later tracing laundering activities via Tornado Cash.

In a somewhat encouraging development, on-chain analyst EmberCN reported that StakeWise successfully recovered 5,041 osETH (valued at $19.3 million) through a contract call, bringing the total stolen assets down to around $98 million.

More than half of the pilfered funds have since been converted to Ethereum, which has heightened efforts to trace their movement.

Balancer confirmed that the security issue was confined to its V2 pools, assuring users that V3 and other pools remain unaffected.

Meanwhile, a previously inactive whale withdrew $6.5 million after the hack, highlighting the shaken confidence among investors in the current DeFi landscape.