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BTC $96,420 +2.34% ETH $3,280 +1.82% SOL $185.40 -0.92% BNB $642.50 +0.45% XRP $2.18 +3.12% DOGE $0.082 -1.50% ADA $1.05 +0.80% AVAX $42.10 +1.15%
11/04/2025

Stream Finance suspends operations after discovering $93 million loss, stablecoin XUSD depegs sharply

Decentralized finance (DeFi) platform Stream Finance sent shockwaves through the community after announcing the suspension of all deposits and withdrawals following the discovery of a $93 million loss in a portfolio managed by an external fund. According to an official post on X (Twitter) on November 3rd, the Stream Finance team stated that the fund manager reported the loss on November 2nd, after which the project retained law firm Perkins Coie to investigate the matter. "We are actively withdrawing

Stream Finance suspends operations after discovering $93 million loss, stablecoin XUSD depegs sharply

Decentralized finance (DeFi) platform Stream Finance sent shockwaves through the community after announcing the suspension of all deposits and withdrawals following the discovery of a $93 million loss in a portfolio managed by an external fund.

According to an official post on X (Twitter) on November 3rd, the Stream Finance team stated that the fund manager reported the loss on November 2nd, after which the project retained law firm Perkins Coie to investigate the matter.

"We are actively withdrawing all liquid assets and expect this process to be completed soon. Stream Finance will provide updates as new developments arise," the development team shared.

Stablecoin XUSD loses half its value

The incident caused the platform's collateralized stablecoin Staked Stream USD (XUSD) to severely depeg, dropping from $1.00 to just $0.51 according to CoinGecko data.

Before Stream Finance made any official announcement, many users had already noticed irregularities when deposits and withdrawals were suspended without warning, triggering panic selling of XUSD.

Labs founder Omer Goldberg stated on X that XUSD "began depegging sharply from its $1 target" just hours after the $100 million-plus attack on Balancer, a separate AMM protocol.

Questions about transparency and the risks of "recursive yield" strategies

Stream Finance is known as a DeFi platform centered on "recursive" yield strategies — where assets are deposited, borrowed against, and redeposited multiple times to maximize returns. However, this model carries significant systemic risk if imbalances or pricing data discrepancies arise.

Previously, Stream Finance drew controversy when it pushed back against how DefiLlama calculated its total value locked (TVL), arguing the platform "does not account for yield loops." Stream claimed to have approximately $160 million in user deposits and over $520 million in assets deployed across investment strategies, though these figures are now being called into question.

According to Minal Thurkal, Head of DeFi Ecosystem Growth at CoinDCX, the Stream Finance incident "underscores the importance of understanding how protocols generate yield and the risks embedded in complex DeFi strategies, especially when they don't conform to widely accepted evaluation standards like DefiLlama."

Ripple effects across the DeFi market

The Stream Finance incident came just days after the attack on Balancer — one of DeFi's largest AMM protocols — further eroding confidence in the DeFi market. Investors are now closely watching the Stream Finance investigation and the prospects of XUSD recovering its peg.

Although the development team insists they will "operate transparently and return user assets to the greatest extent possible," many experts believe this incident could become one of the biggest shocks to the decentralized stablecoin space in 2025.

📉 Stream Finance remains suspended for deposits and withdrawals with no announced timeline for resumption. XUSD is currently trading around $0.51.