Loan and Stablecoin Risks: $284M Exposed in Stream Finance Collapse

Decentralized finance (DeFi) experts have uncovered that over $284 million in stablecoin exposure and outstanding loans are linked to Stream Finance, following the protocol's recent collapse.

Key Takeaways

Stream Finance has over $284 million in identified loans and stablecoin exposure after its collapse.
Key platforms like Euler, Silo, Morpho, and Gearbox hold these connections.
Major DeFi funds and curators like TelosC, Elixir, and others are significantly affected, with TelosC experiencing $123 million in exposure.
There are concerns about transparency in DeFi lending structures.
Stream Finance reported a $93 million loss due to an external fund manager, halting all deposits and withdrawals.

DeFi sleuths trace $284M in loans and stablecoin risk linked to Stream Finance

Mapping DeFi Exposure

On Tuesday, the DeFi collective Yields and More (YAM) published a thorough analysis pinpointing numerous lending markets and vaults—such as Euler, Silo, Morpho, and Gearbox—that are tied to Stream’s synthetic assets, which include xUSD, xBTC, and xETH.

The details reveal a concerning level of fallout within the ecosystem. Exposure loops involving Elixir’s deUSD, Treeve’s scUSD, and other related assets indicate that at least $284.9 million in total debt is currently owed to various lenders. This figure does not account for indirect exposure from secondary vaults or alternative lending strategies.

YAM noted that major DeFi funds such as TelosC, Elixir, MEV Capital, Varlamore, and Re7 Labs are involved. Notably, TelosC holds around $123 million in significant exposure, while Elixir has lent $68 million to Stream, which reportedly constitutes about 65% of its stablecoin reserves.

Source: Elixir

More Stables and Vaults Likely Impacted

YAM further warned that the investigation may not cover all affected vaults and stablecoins. While Elixir claims to have contractual rights for redemption at $1 per deUSD, Stream Finance has stated that repayments are on hold pending legal clarification on the obligations.

These findings underscore the ongoing concerns regarding transparency in DeFi's high-yield frameworks. The involved protocols exhibit layered exposures through various lending markets and derivative stablecoins, complicating the identification of those who will ultimately incur the losses.

“It’s important to note that this is not a comprehensive list; there are probably more stables and vaults that are impacted, and the information here may not be entirely accurate,” YAM warned.

Stream Finance's Financial Challenges

The exposure analysis comes after Stream Finance announced it had suspended deposits and withdrawals due to discovering a $93 million loss attributed to an external fund manager. The protocol has engaged legal firm Perkins Coie to conduct an investigation and attempt asset recovery, but no timeline for resuming operations has been provided.

Before this announcement, traders observed unusual discrepancies between the project’s reported total value locked (TVL) and the figures available on the aggregator DefiLlama. Following the news, the Staked Stream USD (xUSD) rapidly depegged to around $0.50, inducing panic among users. As of the latest data from CoinGecko, the asset is trading at just $0.33.

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