- Its stablecoin, Staked Stream USD (XUSD), has fallen to $0.2975, according to CoinGecko data.
- The depegging followed a $100 million exploit on Balancer, an automated market maker.
- Stream Finance also faced questions about TVL discrepancies with DefiLlama’s figures.
Stream Finance, a decentralised finance (DeFi) platform specialising in yield-generating strategies, has paused all deposits and withdrawals after an external fund manager reported a $93 million loss in its managed assets.
The incident has triggered scrutiny across the DeFi ecosystem, raising questions about risk exposure and transparency among platforms offering high yields through complex strategies.
The Stream Finance team confirmed the loss in an X post on Monday, saying the fund manager disclosed it a day earlier.
The project has since hired lawyers from Perkins Coie to conduct an independent investigation into the matter.
Withdrawals suspended as Stream moves to recover assets
According to Stream Finance, it is currently withdrawing all liquid assets and expects the process to be completed soon.
The team stated that periodic updates will follow as more information becomes available.
While the investigation continues, the platform has suspended withdrawals and stopped processing any pending deposits, effectively freezing user funds until clarity is reached.
Stream Finance’s statement on X read, “We are actively withdrawing all liquid assets and expect this process to be completed in the near term.”
The platform said users would be kept informed through regular updates.
Stream stablecoin XUSD loses peg
Stream Finance operates as a “recursive looping” yield-focused protocol, and it also issues a collateralised stablecoin called Staked Stream USD (XUSD).
Before the team’s public announcement, XUSD had already started to depeg from its $1 target, signalling growing concern among users.
On Sunday, community members noticed that deposits and withdrawals had been paused without prior communication from the team.
As speculation intensified, XUSD slipped below its target range, plunging to as low as $0.51, according to CoinGecko data.
At the time of writing, XUSD is currently priced at $0.2975 and is down by 76.4% in the last 24 hours, marking one of the steepest single-day declines among stablecoins this year.
Omer Goldberg, founder of Labs, posted on X roughly 10 hours before Stream Finance’s official statement that XUSD had begun to depeg “materially below its target range.”
Goldberg linked the event to an over $100 million exploit on Balancer, an automated market maker platform.
The timing between the Balancer exploit and Stream Finance’s reported loss has prompted market observers to draw parallels between liquidity management vulnerabilities and asset exposure risks across DeFi platforms.
TVL discrepancies add to transparency concerns
On Friday, prior to the loss announcement, Stream Finance addressed community concerns regarding discrepancies between its total value locked (TVL) figures displayed on its website and those reported by DefiLlama.
Stream Finance explained on X that DefiLlama excluded recursive looping from its TVL calculations, stating, “DefiLlama has decided that recursive looping is not TVL per their own definitions.
We disagree with this, but to be transparent to users, the website now makes a distinction between user deposits (~$160M) and total assets deployed across strategies (~$520M).”
This clarification highlighted how variations in data methodology can create uncertainty in assessing DeFi protocol exposure.
Analysts have pointed out that mismatched reporting standards across DeFi platforms can obscure the true level of leverage in yield-generation models.
CoinDCX’s head of DeFi Ecosystem Growth, Minal Thurkal, commented that the case underlines the “critical importance of understanding exactly how protocols generate yield and the significant risks involved in complex DeFi strategies.”
She added that projects diverging from recognised metrics like DefiLlama’s TVL calculations can amplify transparency challenges for users and investors alike.
Broader DeFi implications
The Stream Finance incident comes amid growing regulatory attention to DeFi protocols and stablecoin risk management.
Depegging events, such as XUSD’s recent drop, often erode market confidence and prompt liquidity withdrawals across decentralised platforms.
As DeFi continues to expand beyond early adopters, incidents like this emphasise the fragility of complex yield structures and the urgent need for standardised transparency frameworks.
With Stream Finance’s investigation ongoing, the broader ecosystem will be closely monitoring how the project manages asset recovery and user compensation.
