Stream Finance Rocked by $93 Million Loss, Halts Operations Amid Investigation
The decentralized finance (DeFi) sector is reeling after Stream Finance, a prominent DeFi protocol, announced a staggering $93 million loss attributed to an external fund manager. In a swift move to contain the damage and safeguard user assets, the platform has immediately suspended all deposit and withdrawal services and initiated a comprehensive investigation led by the internationally renowned law firm Perkins Coie LLP.
Uncertainty Surrounds the Loss and Potential Connections
The precise nature of the $93 million deficit remains unclear. While the protocol has not specified whether the loss resulted from operational mismanagement by the fund manager, speculation is rife regarding a potential link to the recent multi-chain attack on DeFi giant Balancer, which occurred concurrently. This timing coincidence has significantly amplified market anxieties across the DeFi landscape.
Stream Finance confirmed its ongoing efforts to withdraw all liquidity assets from the protocol, a process expected to be completed in the short term. Furthermore, all pending deposit and transfer transactions have been temporarily frozen, pending the outcome of the ongoing investigation.
Yesterday, an external fund manager overseeing Stream funds disclosed the loss of approximately $93 million in Stream fund assets.
In response, Stream is in the process of engaging Keith Miller and Joseph Cutler of the law firm Perkins Coie LLP, to lead a comprehensive…
— Stream Finance (@StreamDefi) November 4, 2025
XUSD Stablecoin De-pegs, Market Panic Ensues
The news sent shockwaves through the crypto market, particularly impacting Stream’s staked stablecoin, XUSD. Following the disclosure, XUSD rapidly de-pegged from its intended $1 value, plummeting by an alarming 79% over 24 hours to trade at approximately $0.26 at the time of writing. On-chain data revealed a massive sell-off of XUSD on the Arbitrum network, signaling widespread panic among investors.
The market reaction was swift and brutal. Within hours of the initial reports, significant sell pressure emerged on decentralized exchanges like Camelot and Uniswap, as users scrambled to convert XUSD to USDC. This initial wave pushed XUSD from $1 to $0.92. The official confirmation from Stream Finance regarding the suspension of deposits and withdrawals triggered a further catastrophic collapse, with XUSD ultimately hitting a low of $0.2473.
Wider Implications for the DeFi Ecosystem
This financial crisis at Stream Finance is poised to create significant ripple effects across the broader DeFi lending ecosystem. A primary concern for the market revolves around the settlement mechanisms for the protocol’s issued assets: XUSD, XBTC, and XETH.
XUSD, in particular, holds a critical position within the DeFi landscape, being widely utilized as collateral across numerous mainstream lending platforms such as Euler, Morpho, and Silo, and spanning various blockchain networks including Plasma, Arbitrum, and Plume.
Pseudonymous analyst YAM highlighted the scale of potential exposure, estimating that the total outstanding loans currently collateralized by Stream-related assets (including XUSD) could exceed $280 million. This figure, however, does not account for indirect exposures, such as positions involving deUSD or complex multi-loop lending strategies, suggesting the true extent of market vulnerability could be substantially higher.
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