Elixir Winds Down deUSD Following Stream Finance Fallout

Elixir, a decentralized finance liquidity provider, has announced that it will wind down its deUSD synthetic dollar stablecoin.

The decision follows Stream Finance’s disclosure of a major loss that triggered ripple effects across the DeFi ecosystem.

What Happened Between Elixir and Stream Finance?

Earlier this week, Stream Finance announced a significant loss of around $93 million in assets managed by an external fund manager.

Following the incident, the platform suspended all withdrawals and deposits, stating that any pending deposits would not be processed until further notice. The company also stated that it is withdrawing all remaining liquid assets, a process it anticipates completing in the near term.

But why did this impact Elixir’s synthetic stablecoin? According to Nansen,

Elixir responded by sunsetting its synthetic stablecoin. In a post on X (formerly Twitter), the network highlighted that it had processed redemptions for 80% of all deUSD holders.

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Furthermore, the network revealed that it had taken a snapshot of all remaining holder balances. It also launched a claim page for users to redeem their assets in USDC.

The decision led to a collapse in deUSD’s value. According to BeInCrypto Markets, the synthetic stablecoin plunged more than 97% in 24 hours and is now trading around $0.025.

deUSD Collapse. Source: BeInCrypto Markets

Meanwhile, the team noted that Stream Finance still holds around 90% of the total deUSD supply. It added that Stream accounted for over 99% of the lending positions and has opted not to repay or close them.

Elixir said that it will work with Euler, Morpho, Compound, and other curators to coordinate the repayment and liquidation process. The protocol said it still expects all claims to be honored on a 1:1 basis.

Thus, Elixir’s decision to wind down deUSD reflects the broader impact of collateral instability within interconnected DeFi systems. The event highlights how losses in one protocol can impact others and fuels ongoing discussions about collateral design, transparency, and risk management in decentralized finance.

Source: https://beincrypto.com/elixir-deusd-stablecoin-collapse-stream-finance-loss/