Decentralized finance liquidity provider Elixir has suspended support for its synthetic stablecoin deUSD following the fallout from Stream Finance’s $93 million loss earlier this week.
Key Takeaways:
- Elixir halted support for its deUSD stablecoin following Stream Finance’s $93 million loss, which caused deUSD to crash to $0.015.
- Stream’s leveraged exposure, with $68 million owed to Elixir, triggered the 90% plunge of its own XUSD stablecoin.
- Balancer suffered a $128 million exploit but managed to recover $19 million.
Elixir announced on X that it has already processed redemptions for 80% of all deUSD holders, which led the token to depeg to around $0.015, according to CoinGecko data.
The move comes after Stream Finance froze withdrawals on Tuesday, revealing a major hit to its balance sheet and $285 million in debt, including $68 million owed to Elixir.
Stream’s XUSD Crashes 90% as deUSD Exposure Triggers Stablecoin Contagion
Stream had borrowed deUSD to back its own Staked Stream USD (XUSD) stablecoin, which plunged to $0.10 following the disclosure.
Elixir’s deUSD, launched in July 2024, was seen as a challenger to Ethena’s USDe, with a market cap of about $150 million before the crash.
Elixir said Stream holds around 90% of deUSD’s remaining supply, worth roughly $75 million, but has refused to repay or close its positions.
The company is now coordinating with other DeFi protocols like Euler, Morpho, and Compound to fully compensate affected holders.
“We still believe this will be honored 1 for 1,” Elixir stated, adding that it disabled withdrawals to prevent Stream from liquidating deUSD before settling its debt.
Notably, on-chain analysts described the drop in XUSD as a crisis of confidence rather than a technical failure, noting that most of the trading originated from Arbitrum and that no smart contract exploit had been identified.
Social media discussions intensified concerns about the project’s reserves, with some users alleging a $170 million asset base against $530 million in loans, suggesting heavy leverage.
Stream, founded in early 2024, grew rapidly on a promise of capital-efficient DeFi strategies that blended traditional market tactics like hedged market making and yield farming.
However, its dependence on external fund managers, meant to handle overflow beyond internal capacity, has now become the focus of scrutiny, raising questions about transparency and counterparty risk in its model.
Balancer Suffers $128M Exploit, Recovers $19M Amid On-Chain Chase
As reported, DeFi protocol Balancer suffered a massive breach on Monday targeting its V2 Composable Stable Pools, with estimated losses exceeding $128 million across multiple chains, according to PeckShieldAlert.
The attacker exploited authorization and callback flaws to drain funds from interconnected pools in a matter of minutes.
Analysts at Nansen and Cyvers Alerts tracked suspicious transfers of WETH, osETH, and wstETH, later identifying laundering activity through Tornado Cash.
In a rare positive twist, on-chain analyst EmberCN reported that StakeWise successfully recovered 5,041 osETH (worth $19.3 million) via a contract call, reducing total stolen assets to around $98 million.
Over half of the stolen funds have since been swapped to Ethereum, intensifying efforts to trace them.
Balancer confirmed the issue was limited to V2 pools, assuring users that V3 and other pools remain unaffected.
Meanwhile, one dormant whale withdrew $6.5 million following the hack, underscoring shaken investor confidence.
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