Elixir Retires deUSD Following Stream's $93 Million Loss

Elixir, a decentralized finance (DeFi) liquidity provider, has decided to retire its stablecoin deUSD due to a major financial setback experienced by Stream Finance. Stream borrowed deUSD to stabilize its own stablecoin, but after incurring a loss of $93 million, Elixir has announced the depegging of deUSD from the U.S. dollar. The platform is offering compensation to deUSD holders in USDC.

Key Takeaways

Elixir is retiring the deUSD stablecoin due to Stream Finance's $93 million loss.
Compensation for deUSD holders will be provided in USDC via Elixir's protocol.
deUSD has lost nearly 100% of its value, currently valued at $0.026.
Stream Finance owes approximately $285 million in total, including $68 million to Elixir.
Stream holds 90% of the remaining deUSD supply, with more than 91.2 million deUSD still in circulation.

Elixir retires deUSD after Stream's $93M loss

Elixir's Announcement on deUSD Retirement

Elixir has taken the significant step of discontinuing its stablecoin, deUSD, after Stream Finance borrowed the token to bolster its failing stablecoin. On November 6, Elixir declared the stablecoin had “no value” and that it is now officially retired. The platform will compensate deUSD holders in USDC, which will be accessible to all holders of the token, including its derivatives such as sdeUSD.

Holders can claim their compensation through Elixir’s website, where they will be prompted to connect their wallets to receive their USDC. However, deUSD holders on the Sui and Sei networks, as well as some Automated Market Makers and Liquidity Providers, will not be able to access these compensations at present.

Recent data from CoinGecko shows that deUSD has depegged from the U.S. dollar, plummeting in value nearly to 100% within the past 24 hours and now sitting at just $0.026. Elixir has advised, “deUSD holds no value, and the stablecoin has been sunset. Please do not buy or invest in deUSD, including through AMMs.”

So far, compensation has been provided to about 80% of current deUSD holders, excluding those held by Stream Finance, which possesses around 90% of the remaining supply. Currently, over 91.2 million deUSD tokens still exist in circulation. Elixir has halted all minting and redeeming operations for deUSD as it plans to permanently retire the stablecoin soon. According to their announcements, “Any affected LPs in AMM pools or lending markets will be able to claim the full value of their position,” affirmed Elixir.

Reasons for Elixir's Decision to Sunset deUSD

The decision to retire deUSD comes in light of Stream Finance’s recent financial tumult. Just two days prior, Stream reported a staggering loss of $93 million in net assets, as revealed by its external asset fund manager. The specific reasons for this loss are still being investigated, and the DeFi solution platform has sought assistance from Keith Miller and Joseph Cutler of the legal firm Perkins Coie LLP to navigate this crisis.

Due to the fallout from this incident, Stream Finance has temporarily halted all withdrawals and deposits, and pending deposits are also suspended. It has come to light that Stream Finance owes around $285 million across various lenders in the crypto space, including approximately $68 million that is owed to Elixir. Additionally, Stream had utilized deUSD to stabilize its other struggling stablecoin, Staked Stream USD (XUSD), which has seen its value drop from $1 to just $0.17.

Elixir's report indicates that Stream Finance continues to hold about $75 million worth of deUSD, with Elixir maintaining a similar amount of the remaining supply as a Morpho loan to Stream. Elixir claims that Stream has opted not to repay or liquidate their existing lending positions, which comprise over 99% of the total on-chain lending positions. Consequently, Elixir will collaborate with Euler, Morpho, and Compound to facilitate the repayment of the Stream loan and work towards liquidating Stream's positions. "We still believe this will be honored 1 for 1," concluded Elixir.