Stream Finance, a yield-generating protocol, confirmed a loss of $93 million in user funds after a targeted exploit. In response, the team suspended all deposits and withdrawals.
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The market reaction was immediate.
Stream’s native stablecoin, xUSD, lost its peg and collapsed to zero, wiping out its holders overnight.
The bank run has begun
The collapse of xUSD has led to a large-scale bank run through interconnected DeFi protocols. On-chain data shows the largest weekly outflows of stablecoins since the Terra/LUNA crash $1 billion leave the sector within 48 hours.
Protocols that were exposed to Stream’s looping return strategies are now facing successive liquidity crises:
- Coinshift’s csUSDL: Total Value Locked (TVL) down 95%.
- Elixir’s deUSD and sdeUSD: severe liquidity drop as users race to exit.
What started with the Balancer exploit was the spark. The hidden leverage between these protocols is the gunpowder. And now the DeFi market is watching that powder ignite – live, on-chain.
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