Elixir Initiates deUSD Shutdown Following Stream Finance Debt Crisis

Elixir has begun winding down its deUSD synthetic dollar stablecoin following significant exposure to the Stream Finance collapse earlier this week. According to an X post from the protocol, about 80% of deUSD holders have already received redemptions as part of the sunsetting process.

Stream Finance, a decentralized finance platform, halted withdrawals on November 4 after an external fund manager disclosed a $93 million loss. The protocol reportedly holds a debt exceeding $285 million to multiple lenders, including more than $68 million owed to Elixir. This event has triggered ripple effects across the DeFi ecosystem, with Stream’s xUSD stablecoin now trading below $0.20 and causing distress to other tokens such as Stable Labs’ USDX.

Launched in mid-2024, Elixir’s deUSD was designed as a decentralized, non-custodial alternative to Ethena Lab’s USDe. The token quickly gained traction as a collateral asset and was even used by Hamilton Lane’s tokenized HLSCOPE fund for backing. However, the exposure to Stream’s default has forced Elixir to act decisively to protect its users.

Elixir's Strategy to Secure Repayment and Protect deUSD Holders

Elixir has disabled its mint and redeem infrastructure to prevent any liquidation of deUSD by Stream before loan repayment. The team has assured holders that all deUSD claims will be redeemed one-to-one for USDC plus a 0.0000012% adjustment. A snapshot of all deUSD and sdeUSD holder balances has already been taken as part of this process.

According to the protocol, Stream holds approximately 90% of the deUSD supply, while Elixir maintains most of the remaining collateral as a Morpho loan to Stream. Despite the setback, Elixir remains confident that full redemptions will be honored. The project is now collaborating with decentralized lenders such as Euler, Morpho, and Compound, alongside vault curators, to unwind its lending positions and recover funds.

Elixir emphasized that deUSD remains fully backed and reassured affected liquidity providers that they will be able to claim the full value of their holdings once repayments are processed. The protocol’s focus now lies in stabilizing operations and completing redemptions to close the chapter on deUSD while maintaining transparency with its community.