Decentralized finance platform Stream Finance has announced a pause on all deposits and withdrawals following the discovery of a $93 million loss in its assets. The loss was reported by an external fund manager overseeing the platform's funds.
The Stream Finance team stated in an X post on Monday that the fund manager informed them of the loss on Sunday. The project has since engaged legal counsel from Perkins Coie to conduct a thorough investigation into the incident.
"We are actively withdrawing all liquid assets and expect this process to be completed in the near term," the team communicated. "We will provide periodic updates as additional information becomes available."
While the investigation is underway, Stream Finance has temporarily suspended all withdrawal processes and will not be processing any pending deposits.
Stream's Stablecoin Suffers Significant Depeg
Stream Finance operates as a yield-focused DeFi platform employing a "recursive looping" strategy. It also offers a collateralized stablecoin known as Staked Stream USD (XUSD).
Prior to Stream Finance's official announcement on X on Monday, the XUSD stablecoin had already begun to depeg from its intended dollar value. This price action occurred as users started to express concerns on Sunday, questioning the unannounced pause in deposits and withdrawals.
Omer Goldberg, founder of Labs, posted on X approximately 10 hours before Stream's announcement, noting that XUSD had "began to depeg materially below its target range." This depegging followed a significant exploit on the automated market maker Balancer, which resulted in losses exceeding $100 million.
As of the time of reporting, XUSD had fallen to a low of $0.51, according to data from CoinGecko.
Earlier on Friday, Stream Finance had addressed community inquiries on X regarding discrepancies between the platform's total value locked (TVL) as reported on its website and the figures listed on the data service DefiLlama.
"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)," the platform explained.
Minal Thurkal, Head of DeFi Ecosystem Growth at CoinDCX, commented on the situation, stating, "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."