Following Stream Finance’s massive $93 million loss, DeFi protocol Elixir announced it will sunset its synthetic stablecoin, deUSD, which has plunged to just 1.5 cents.
Elixir Winds Down deUSD Amid Ripple Effects from Stream Collapse
Decentralized liquidity provider Elixir has officially decided to sunset its deUSD synthetic stablecoin, citing severe contagion from Stream Finance’s $93 million loss earlier this week.
In an announcement on X (formerly Twitter) on Thursday, Elixir confirmed that it had already processed redemptions for 80% of deUSD holders, but the move caused the token’s value to collapse from $1 to just $0.015, according to CoinGecko data.
Stream’s $93M Loss Triggers Chain Reaction Across DeFi
Stream Finance halted withdrawals on Tuesday after revealing a $93 million net asset loss from an external fund manager. The protocol reportedly faces $285 million in debt, including about $68 million owed to Elixir.
Stream had borrowed Elixir’s deUSD to support its own stablecoin, Staked Stream USD (XUSD) — which also collapsed, trading as low as $0.10 following the disclosure.
The cascading losses effectively trapped $75 million worth of deUSD within Stream’s system, leaving Elixir unable to recover a majority of its backing assets.
From Rising Challenger to Rapid Collapse
Launched in July 2024, deUSD was designed as a synthetic stablecoin to compete with Ethena Labs’ USDe, quickly growing to a $150 million market cap before its downfall.
However, following Stream’s insolvency, deUSD’s collateral base evaporated almost overnight. Elixir said Stream now holds roughly 90% of the remaining deUSD supply, valued at around $75 million, but has refused to repay or unwind its loans.
“Stream decided not to repay or close those positions,” Elixir stated. “We’re now coordinating with lenders such as Euler, Morpho, and Compound to ensure holders are made whole.”
Despite the collapse, Elixir maintains that it intends to honor all deUSD redemptions 1:1, though the stablecoin’s peg and ecosystem have effectively been dismantled.
A Stark Reminder for DeFi’s Stablecoin Risks
The deUSD sunset marks one of the most significant synthetic stablecoin failures since TerraUSD’s 2022 collapse, underscoring ongoing risks in DeFi’s leveraged and interconnected lending ecosystems.
By disabling withdrawals, Elixir said it aimed to prevent Stream from liquidating remaining deUSD collateral before repaying its debt.
With the deUSD project now winding down, the incident highlights how inter-protocol dependencies can quickly destabilize even well-capitalized DeFi systems.
Elixir’s downfall serves as yet another warning that “synthetic stability” in DeFi remains anything but stable.
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