- Their stablecoin, Staked Stream USD (XUSD), fell to $0.2975, according to CoinGecko data.
- The depeg followed a $100 million exploit on Balancer, an automated market maker.
- Stream Finance was also questioned about discrepancies in TVL compared with DefiLlama’s figures.
Stream Finance, a decentralized finance (DeFi) platform focused on yield-generating strategies, has suspended all deposits and withdrawals after an external fund manager reported a $93 million loss in assets under management.
The incident has triggered intense scrutiny across the DeFi ecosystem, raising questions about risk exposure and transparency among platforms that offer high yields through complex strategies.
The Stream Finance team confirmed the loss in a post on X on Monday, saying the fund manager disclosed the issue the day prior.
The project has retained Perkins Coie lawyers to conduct an independent investigation into the matter.
Withdrawals suspended as Stream moves to recover assets
According to Stream Finance, the team is currently liquidating all available liquid assets and expects the process to be completed shortly.
They said periodic updates will be provided as new information becomes available.
While the investigation continues, the platform has suspended withdrawals and stopped processing pending deposits, effectively freezing user funds until clarity is achieved.
The Stream Finance statement on X read: “We are actively withdrawing all liquid assets and expect this process to be completed in the near term.”
The platform added that users will be kept informed through regular updates.
The XUSD stablecoin loses its peg
Stream Finance operates as a yield-focused protocol employing “recursive looping” strategies and also issues a collateralized stablecoin named Staked Stream USD (XUSD).
Before the team’s public announcement, XUSD had already begun to drift away from its $1 target, signaling growing concern among users.
Community members noticed on Sunday that deposits and withdrawals had been suspended without prior communication from the team.
As speculation mounted, XUSD fell below its target range, plunging to as low as $0.51, according to CoinGecko data.
At the time of writing, XUSD is priced at $0.2975, down 76.4% over the past 24 hours, marking one of the largest single-day declines among stablecoins this year.
source: CoinGecko
Omer Goldberg, founder of Labs, posted on X roughly 10 hours before Stream Finance’s official statement that XUSD had begun to materially depeg below its target range.
Goldberg linked the event to a Balancer exploit exceeding $100 million, an automated market maker vulnerability.
The time gap between the Balancer exploit and the loss reported by Stream Finance prompted market observers to draw parallels between liquidity-management weaknesses and exposure risks across DeFi platforms.
TVL discrepancies add to transparency concerns
On Friday, prior to the loss announcement, Stream Finance addressed community concerns over discrepancies between its total value locked (TVL) figures shown on its website and those reported by DefiLlama.
Stream Finance explained on X that DefiLlama excluded recursive looping from its TVL calculations, stating that “DefiLlama decided that recursive looping is not TVL according to its own definitions.”
Stream said it disagreed, but to increase transparency it updated its website to distinguish user deposits (~$160 million) from the total assets deployed in strategies (~$520 million).
This clarification highlighted how differences in data methodology can create uncertainty when assessing a DeFi protocol’s exposure.
Analysts noted that inadequate reporting standards on DeFi platforms can obscure the true level of leverage embedded in yield-generation models.
Minal Thurkal, head of DeFi ecosystem growth at CoinDCX, commented that the incident underscores “the crucial importance of understanding exactly how protocols generate yield and the significant risks involved in complex DeFi strategies.”
She added that projects deviating from widely accepted metrics, such as DefiLlama’s TVL calculations, can amplify transparency issues for users and investors.
Broader implications for DeFi
The Stream Finance incident occurs against a backdrop of increasing regulatory attention on DeFi protocols and the risk management of stablecoins.
Depegging events, like the recent collapse of XUSD, often erode market confidence and trigger liquidity withdrawals from decentralized platforms.
As DeFi continues to expand beyond early adopters, incidents of this kind highlight the fragility of complex yield structures and the urgent need for standardized transparency frameworks.
With Stream Finance’s investigation ongoing, the wider ecosystem will be watching closely to see how the project handles asset recovery and potential compensation for affected users.