- The stablecoin, Staked Stream USD (XUSD), has fallen to $0.2975, according to CoinGecko data.
- The depegging followed a $100 million exploit on Balancer, an automated market maker.
- Stream Finance also faced questions about TVL differences with DefiLlama’s figures.
Stream Finance, a decentralized finance (DeFi) platform specializing in return-generating strategies, has suspended all deposits and withdrawals after a third-party fund manager reported a $93 million loss in its assets under management.
The incident has sparked scrutiny within the DeFi ecosystem, raising questions about risk exposure and transparency among platforms that offer high returns through complex strategies.
The Stream Finance team confirmed the loss in a X message on Mondaysaid the fund manager had announced it a day earlier.
The project has since hired attorneys from Perkins Coie to conduct an independent investigation into the matter.
Withdrawals suspended as Stream attempts to reclaim assets
According to Stream Finance, it is currently withdrawing all cash and expects the process to be completed soon.
The team stated that periodic updates will follow as more information becomes available.
While the investigation continues, the platform has suspended withdrawals and stopped processing outstanding deposits, effectively freezing user funds until clarity is reached.
Stream Finance’s statement on
The platform said users would be kept informed through regular updates.
Stream stablecoin XUSD loses peg
Stream Finance operates as a “recursive looping” yield-oriented protocol, and also issues a collateralized stablecoin called Staked Stream USD (XUSD).
Before the team’s public announcement, XUSD had already started to diverge from its $1 target, signaling growing concern among users.
On Sunday, community members took notice that deposits and withdrawals were interrupted without prior communication from the team.
As speculation intensified, XUSD fell below its target range and plummeted to a low of $0.51, according to CoinGecko data.
At the time of writing,
Omer Goldberg, Founder of Labs, posted on X about 10 hours before Stream Finance’s official statement that XUSD began to fall “materially below its target range.”
Goldberg linked the event to a more than $100 million exploit on Balancer, an automated market maker platform.
The timing between the Balancer exploit and Stream Finance’s reported loss has prompted market observers to draw parallels between liquidity management vulnerabilities and asset exposure risks on the DeFi platforms.
TVL differences increase transparency concerns
On Friday, ahead of the loss announcement, Stream Finance raised community concerns about discrepancies between the total value locked (TVL) figures shown on its website and those reported by DefiLlama.
Current Finance explained on X that DefiLlama excludes recursive looping from its TVL calculations and states: “DefiLlama has decided that recursive looping is not TVL according to their own definitions.
We disagree, but to be transparent to users the website now distinguishes between user deposits (~$160 million) and total assets deployed across strategies (~$520 million).”
This clarification highlighted how variations in data methodology can create uncertainty when assessing exposure to the DeFi protocol.
Analysts have pointed out that mismatched reporting standards across DeFi platforms can obscure the true level of leverage in return generation models.
CoinDCX’s Head of DeFi Ecosystem Growth, Minal Thurkal, noted that the case underlines the “critical importance of understanding exactly how protocols generate yield and the significant risks associated with complex DeFi strategies.”
She added that projects that deviate from recognized benchmarks such as DefiLlama’s TVL calculations could increase transparency challenges for both users and investors.
Broader DeFi Implications
The Stream Finance incident comes amid growing regulatory attention on DeFi protocols and stablecoin risk management.
Depegging events, such as the recent drop in XUSD, often undermine market confidence and cause liquidity drains on decentralized platforms.
As DeFi expands beyond early adopters, incidents like these highlight the fragility of complex return structures and the urgent need for standardized transparency frameworks.
With Stream Finance’s investigation underway, the broader ecosystem will be keeping a close eye on how the project manages asset recovery and user compensation.
