DeFi platform Stream Finance suspends deposits and withdrawals as it investigates a $93 million asset loss; its stablecoin XUSD plunges to $0.50 amid growing investor panic.
Stream Finance Freezes Activity After Massive Loss
Stream Finance, a decentralized finance (DeFi) platform known for its high-yield “recursive looping” strategies, has paused deposits and withdrawals after discovering a $93 million loss in managed assets. The loss was reported by an external fund manager overseeing the project’s funds.
In a statement on X (formerly Twitter) on Monday, the Stream Finance team confirmed the issue, noting that it has retained law firm Perkins Coie to assist with the investigation.
The suspension of withdrawals and deposits has left users unable to access funds, triggering uncertainty and speculation across the DeFi community.
XUSD Stablecoin Plummets by Half
Stream Finance’s collateralized stablecoin, Staked Stream USD (XUSD), has depegged sharply to as low as $0.51, according to CoinGecko data. The depeg began on Sunday, hours before the team’s official announcement, as traders noticed abnormal delays in transactions.
DeFi developer Omer Goldberg flagged the issue earlier, noting that XUSD had “begun to depeg materially below its target range” following an over $100 million exploit on Balancer, another decentralized exchange platform.
The timing of the events has fueled speculation that the Stream loss may be indirectly linked to broader instability in DeFi protocols using interconnected liquidity pools and leveraged yield strategies.
Transparency Questions and TVL Discrepancies
Prior to the announcement, users had questioned discrepancies between Stream’s Total Value Locked (TVL) figures displayed on its website and those shown by DefiLlama, a popular DeFi data aggregator.
Stream Finance clarified on Friday that DefiLlama excluded recursive looping assets from its TVL calculations.
“DefiLlama has decided that recursive looping is not TVL per their definitions,” Stream stated. “We disagree, but our website now distinguishes between user deposits (~$160M) and total deployed assets (~$520M).”
Experts Warn of DeFi Strategy Risks
Industry experts say the Stream Finance case highlights the risks of complex yield-generation models and the need for transparency in decentralized systems.
“This underscores the critical importance of understanding exactly how protocols generate yield,” said Minal Thurkal, Head of DeFi Ecosystem Growth at CoinDCX. “Complex DeFi strategies carry significant risk, especially when they challenge established metrics like DefiLlama’s TVL definitions.”
As investigations continue, the Stream Finance community faces growing uncertainty, with both investors and analysts urging caution amid heightened DeFi volatility.
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