Elixir’s synthetic stablecoin, deUSD, has lost nearly all its value after Stream Finance defaulted on a major loan.
The default and withdrawal freeze have left the DeFi ecosystem scrambling to contain the fallout.
Stream Finance default sparks liquidity shock
Elixir confirmed on X that it has already processed redemptions for around 80% of all deUSD holders.
The move, however, triggered a massive depeg that sent deUSD to about $0.015, according to CoinGecko data.
The stablecoin, launched in July 2024 as a challenger to Ethena’s USDe, had a market capitalization of roughly $150 million before the collapse.
The crisis began when Stream Finance halted withdrawals on Tuesday after an external fund manager disclosed a $93 million loss in user assets.
The firm revealed $285 million in total debt, including $68 million owed to Elixir. Stream had borrowed deUSD to support its own Staked Stream USD (XUSD) stablecoin, which later plunged to $0.10 following the disclosure.
Elixir stated that Stream currently holds about 90% of the remaining deUSD supply, worth approximately $75 million.
Despite repeated communication, Stream has refused to repay or close its positions, leaving Elixir unable to recover collateralized assets.
To prevent further liquidation, Elixir temporarily disabled withdrawals while coordinating with protocols like Euler, Morpho, and Compound to help affected users recover losses.
According to on-chain data by Nansen AI, about 65% of deUSD’s collateral was allocated to Stream Finance, nearly two-thirds of the token’s total backing. This left Elixir heavily exposed when Stream’s assets were frozen.
Security flaws and leveraged exposure deepen the fallout
Security researchers at Decurity and PeckShield identified additional technical flaws that worsened Stream’s position.
The vulnerabilities originated from Balancer’s internal swap logic, integrated into Stream’s liquidity operations.
Hackers exploited these bugs in Balancer’s V2 Composable Stable Pools, draining more than $128 million across multiple chains.
The access control flaw in Balancer’s manageUserBalance function and a logic error in the validateUserBalanceOp process allowed unauthorized withdrawals.
The breach directly impacted Stream-linked assets, causing its Staked Stream USD (XUSD) to crash from $0.50 to $0.14 within a day, as reported by CoinGecko.
The estimated Stream’s total debt exposure at $285 million across lending platforms such as Euler, Morpho, Silo, and Gearbox.
Major creditors include Elixir, TelosC, MEV Capital, and Varlamore. Blockchain security firm PeckShield later traced large-scale dumping of deUSD on Curve Finance by wallets tied to Stream, accelerating the collapse from $1 to $0.03.
In a public statement, Elixir assured users that redemptions would still be honored “1 for 1” once remaining claims are settled.
The company took a snapshot of all deUSD and sdeUSD balances, pledging to launch a claim portal to compensate holders.
Despite the setback, Elixir maintains confidence that its ecosystem will recover once Stream’s obligations are resolved.