<\/p>\n
Staked Stream USD (xUSD) is trading at less than 30 cents on the dollar amid concerns about the protocol’s solvency.<\/p>\n
After a week of uncertainty, yield optimizer Stream Finance announced<\/a> late last night that it has lost $93 million, a significant portion of its total value locked (TVL), and the market is bracing for further contagion from its collapse as the broader market craters<\/a>.<\/p>\n What began as a back-and-forth between CBB<\/a>, an anonymous whale, and the Stream team over risk management has evolved into an alarming event for decentralized finance (DeFi) users after Stream shared that \u201can external fund manager overseeing Stream funds disclosed the loss of approximately $93 million in Stream fund assets.\u201d <\/p>\n As a result, Stream\u2019s staked stablecoin, xUSD<\/a>, has depegged by 73% to just $0.27, and users are scrambling to reassess their DeFi positions and avoid any contagion.<\/p>\n According to a summary<\/a> from the Yields and More (YAM) DeFi group, there is now a mountain of debt across multiple DeFi protocols with exposure to Stream\u2019s xUSD, xBTC, and xETH, with an estimated $285 million owed to lenders.<\/p>\n Notable DeFi protocols such as Telos and Elixir account for $190 million of this debt, with exposure to leading lending markets including Euler, Silo, and Morpho. YAM clarified, \u201cThere might be more; this is all we found.\u201d While the knock-on effects for these lenders are unclear, both Euler<\/a> and Morpho<\/a> have seen significant drops in TVL today of between $400 million and $600 million.<\/p>\n Following the disclosure, cynics are looking back at the Stream team\u2019s behavior over the last few weeks, and some are questioning whether the team sought to bring in new deposits to cover the hole. <\/p>\n A prominent trader known as \u201cchud.eth,\u201d took to X to share screenshots of a conversation with Stream\u2019s founder, asking him to consider depositing into Stream on Oct 13. <\/p>\n \u201cI am going to be really pissed if they knew about this hole on 13\/10 and asked me to deposit $20m in full knowledge that it was unbacked,\u201d said<\/a> chud.eth.<\/p>\n Meanwhile, some users reportedly had no idea that they had exposure to Stream.<\/p>\nDeFi Lenders Left Holding the Bag<\/h2>\n