Balancer chain reaction? Stream Finance exploded with a loss of 93 million USD, xUSD depeg collapse

The on-chain yield protocol Stream Finance announced that its delegated external fund manager has exposed approximately $93 million in asset losses, leading to a complete suspension of withdrawals and deposits. Its flagship yield token xUSD also experienced a severe decoupling, falling to $0.42. This incident occurred following the panic caused by the hacking of Balancer v2, highlighting the structural risks of high leverage and low transparency.

Stream Finance announced the suspension of deposits and withdrawals, resulting in a loss of 93 million USD in assets.

Stream Finance stated on platform X this morning that an external fund manager responsible for managing Stream's funds disclosed a loss of approximately $93 million. To clarify the truth, Stream has hired attorneys Keith Miller and Joseph Cutler from the law firm Perkins Coie LLP to lead the investigation.

The team stated that all deposits and withdrawals will be suspended until a full assessment of the scope and causes of the losses can be made, and they are actively withdrawing the remaining liquidity assets to prevent further losses from expanding.

xUSD severely decoupled: price falls below 0.4 USD, user panic spreads

The security company PeckShield also issued a warning, indicating that Stream's stable yield token xUSD has significantly decoupled, dropping from its original 1.26 to 0.42 USD, with volatility continuing to worsen.

xUSD is the main product of Stream, representing users' positions in high-yield strategies; however, during a liquidity crisis, its collateral value declines in tandem with market trust.

DeFi Chain Reaction: Balancer Attack Triggers Panic, Funds Rush to Withdraw

Omer Goldberg, the founder of Chaos Labs, pointed out that this incident occurred after the Balancer v2 attack, at which time the DeFi market was unclear about the scope and exposure of the affected liquidity pools. L2 networks such as Base, Polygon, and Sonic were at risk, and various chains implemented hard forks or freeze measures for emergency response.

(Balancer suspected of being hacked for 116 million USD! Major security vulnerability in DeFi again )

In the context of information opacity, funds naturally rush to fully withdraw from any potentially affected protocols. This chain reaction also impacted Stream Finance, whose high-leverage structure and opaque dashboard or reserve proof had just raised many concerns last week.

Stream founder Solettyy and 0xlaw just stated five days ago that they would launch third-party reserve proof within 10 hours, and now the latter's account has switched to protected mode. Chaos Labs looks at the current status of yield products: a dangerous combination of high leverage and low transparency.

Chaos Labs analysis shows that Stream Finance executes high-risk and high-reward yield strategies for user funds through multi-chain lending markets such as Euler, Morpho, or Silo. At the same time, xUSD is used as collateral and yield assets, which not only amplifies leverage but also makes the system more vulnerable under stress scenarios.

Stream position on Euler: borrowed a total of 4.167 million USD in USDC by collateralizing with xUSD, part of the health is nearing liquidation (1.02)

The reason for such decoupling without liquidation is that some markets use the “fundamental oracle (” instead of real-time market prices for pricing.

This mechanism of fixing the price can prevent unnecessary liquidations caused by short-term fluctuations in normal times, but when the product truly collapses, it is still the investors who ultimately bear the bad debts.

) From the decoupling of USDe, examining the resilience of DeFi: Key differences of on-chain liquidation compared to centralized exchanges (

High returns come with high risks: The cost of DeFi specialization

Goldberg reminds that the Stream model highlights the gradual structuring and complexity of DeFi yield products, but at the same time, it also makes it more difficult for users to understand and for regulators to oversee.

Curated Markets ) can become a rapidly growing engine, but it must not devolve into a race for high returns.

He urged the industry to strengthen reserve proof, real-time transparency dashboards, and risk management professionalization; otherwise, high returns will only bring more potential domino effects.

This article Balancer Chain Reaction? Stream Finance exploded with a loss of 93 million USD, xUSD decoupled and collapsed first appeared in Chain News ABMedia.