Stream Finance Suspends Operations Amid Significant Loss

Decentralized finance platform Stream Finance has announced a pause on both deposits and withdrawals. This decision follows the discovery of a $93 million loss in its assets, identified by an external fund manager overseeing the platform's financial operations.

The Stream Finance team communicated this development via an X post on Monday, stating that the fund manager reported the substantial loss on Sunday. In response, the project has engaged legal counsel from Perkins Coie to conduct a thorough investigation into the matter. "We are actively withdrawing all liquid assets and expect this process to be completed in the near term," the team stated. "We will provide periodic updates as additional information becomes available."

While the investigation is underway, Stream Finance has temporarily halted all withdrawal requests and will not be processing any pending deposits.

XUSD Stablecoin Experiences Significant Devaluation

Stream Finance operates as a "recursive looping" yield-generating DeFi platform, featuring a collateralized stablecoin known as Staked Stream USD (XUSD).

Prior to Stream Finance's announcement on X, XUSD had already begun to depeg from its dollar value. Many users had sensed potential issues on Sunday, questioning the sudden suspension of deposits and withdrawals without any prior communication from the platform's team.

Omer Goldberg, founder of Labs, posted on X approximately 10 hours before Stream's official announcement, noting that XUSD had "began to depeg materially below its target range" following a reported exploit exceeding $100 million on the automated market maker Balancer.

As of the time of this report, XUSD has plummeted to as low as $0.51, according to data sourced from CoinGecko.

On Friday, Stream Finance addressed community concerns regarding discrepancies between the platform's Total Value Locked (TVL) reported on its website and the figures listed on the popular data service DefiLlama. This was done via an X post in response to direct questions from community members.

The response stated, "DefiLlama has decided that recursive looping is not TVL per their own definitions. We disagree with this, but to be transparent to users the website now makes a distinction between user deposits (~$160M) and total assets deployed across strategies (~$520M)."

Minal Thurkal, Head of DeFi Ecosystem Growth at CoinDCX, commented, "This underscores the critical importance of understanding exactly how protocols generate yield and the significant risks involved in complex DeFi strategies, especially those that disagree with standard metrics like DefiLlama's TVL."

Magazine: 'Help! My robot vac is stealing my Bitcoin': When smart devices attack