Stream Finance has halted deposits and withdrawals from its platform in response to the loss of $93 million of “Stream fund assets.”
The news caused the xUSD yield vault token to depeg over 75%. At the time of writing it’s trading at $0.30 rather than its target price of around $1.27.
It blames the loss on an “external fund manager overseeing Stream funds.”
Read more: DeFi projects under fire for inflated TVL and murky lending loops
Just over a week ago, concerns began to circulate over a tangled web of yield vaults, including Stream Finance’s xUSD. The high yields offered were often propped up via looped lending and borrowing of their own and each others’ assets.
Since then, total value locked (TVL) on Stream has dropped from a high of over $200 million to just $98 million today, per DeFiLlama data.
The platform lost $50 million in TVL yesterday alone.
Protos’ previous reporting looked into a “DeFi daisy chain” of lending between Stream Finance’s xUSD, YieldFi’s yUSD and Elixir’s deUSD. Most of the strategies also relied on Midas’ mHYPER to greater or lesser extent.
The assets were leveraged against each other on decentralized finance lending platforms such as Morpho and Ruler.
These assets mostly bill themselves as a variation on “stablecoin-backed market-neutral strategies,” similar to Ethena’s USDe.
The Transparency page of Stream Finance’s website reads “Coming soon!,” with a link to a bundle of addresses on portfolio tracker Debank standing in for any detailed proof of reserves.
In response to last week’s criticism, Stream split up its TVL to show “user deposits” against “assets under management” (i.e. the purported value of leveraged positions).
The data is currently at odds with DeFiLlama’s metrics.
Read more: Balancer exploit drains $129M in DeFi disaster
As confidence waned and TVL began to drop, the unwinding of looped positions led to a spike in borrowing rates, with one critic estimating Stream to be paying over half a million dollars in interest daily.
X user Yields And More posted an analysis of all vaults and stablecoins “that have (in)direct exposure to Stream.”
We’ll be keeping tabs on this story as it develops and will update below:
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Source: https://protos.com/stream-finance-halts-withdrawals-after-93m-loss-xusd-depegs-by-75/
