Article Summary
- Analysis of over $284 million in stablecoin exposure linked to Stream Finance's collapse.
- Impact of the collapse on lending protocols like Euler, Silo, Morpho, and Gearbox.
- Concerns about transparency in the DeFi ecosystem's high-yield infrastructure.
- Stream Finance's $93 million loss attributed to an external fund manager.
- xUSD stablecoin depegged to around $0.33.
Introduction
Following the collapse of Stream Finance, decentralized finance (DeFi) researchers have mapped out over $284 million in stablecoin exposure and outstanding loans connected to the protocol. This collapse raises questions about the interconnectedness and transparency within the DeFi sector, as well as the inherent risks in high-yield lending strategies.
Exposure Details
A detailed post by DeFi group Yields and More (YAM) flagged dozens of lending markets and vaults, including platforms like Euler, Silo, Morpho, and Gearbox, holding positions connected to Stream’s synthetic assets, which include xUSD, xBTC, and xETH. The data highlighted the potential widespread impact, with exposure loops involving Elixir’s deUSD, Treeve’s scUSD, and other assets suggesting that at least $284.9 million in overall debt is owed to lenders across various markets. This excludes indirect exposure via secondary vaults and other lending strategies.
Affected Participants
According to the post, affected DeFi funds and curators included TelosC, Elixir, MEV Capital, Varlamore, and Re7 Labs. The post showed that TelosC has roughly $123 million in material exposure, while Elixir has $68 million lent to Stream, estimated to be 65% of its stablecoin backing. YAM stated that more vaults and stables were “likely affected.”
Redemption Rights and Legal Uncertainty
Elixir claimed to have contractual redemption rights at $1 per deUSD. However, Stream Finance reportedly stated that repayment must wait until lawyers determine “who is owed what.”
Transparency Concerns
The findings reinforce existing concerns about transparency in the DeFi ecosystem’s high-yield infrastructures. The protocols involved had layered exposures through lending markets and derivative stablecoins, making it difficult to pinpoint who ultimately bears the losses.
Stream Finance's $93 Million Loss
The exposure map follows Stream Finance’s announcement that it had paused deposits and withdrawals after finding a $93 million loss attributed to an external fund manager. The project stated that it had employed the services of the law firm Perkins Coie to investigate and recover assets but did not provide a timeline for resuming its normal operations.
Impact on xUSD Value
Following the announcement, Staked Stream USD (xUSD) quickly depegged to around $0.50, reflecting fear among users. At the time of writing, CoinGecko data indicated that the asset is trading at $0.33.
