Decentralized finance (DeFi) protocol Stream Finance announced losses of approximately $93 million from its managed assets. The protocol confirmed late Monday that all withdrawals and deposits have been suspended following the disclosure by an external fund manager. The platform also announced it has engaged legal experts Keith Miller and Joseph Cutler from Perkins Coie LLP to lead a comprehensive investigation into the loss.
The firm stated on X, “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 investigation into the incident.” Stream emphasized that the suspension of deposits and withdrawals will remain until the full extent of the issue is known. Pending deposits will also not be processed.
Depegging of xUSD raises broader concerns
Security firm Peckshield reported that Stream Finance’s stablecoin, Staked Stream USD (xUSD), had sharply depegged. Depegging refers to when a stablecoin’s value sharply deviates from the asset that it is tied to.
The token fell approximately 22% within 24 hours to $0.958 at the time Peckshield reported, according to CoinGecko, and as of writing, the token has plunged to $0.5694 — marking a 63% decline in a single day.
Besides the financial hit, the collapse triggered questions about Stream’s asset management and transparency practices. Omer Goldberg, Founder and CEO of Chaos Labs, wrote on X that the event followed a “multichain @Balancer exploit” that disrupted confidence across DeFi. He noted, “Stream Finance does not currently maintain a comprehensive transparency dashboard or a Proof of Reserve; however, it publishes a link to a Debank Bundle that shows its on-chain positions.”
Liquidity pressure and leverage exposure
Goldberg further explained that Stream’s leveraged positions and exposure across multiple chains, including Arbitrum and Plasma, amplified risks during the liquidity crunch. Moreover, he pointed out that Stream’s reliance on “fundamental value” oracles instead of real-time market pricing delayed liquidation triggers. While such systems can prevent unfair liquidations during volatility, they also convert “price discovery into trust discovery” when confidence falters.
Additionally, Parallel Protocol said on X that several teams had tried reaching Stream Finance for days without any response. As a result, Parallel has decided to cut its exposure and assured users that “USDp on Avalanche has no direct or indirect exposure to xUSD… USDp on Avalanche is 100% backed by native USDC.”
Industry debate on risk awareness widens
The Stream Finance loss has sparked debate about how transparent and overleveraged DeFi platforms have become. The $93 million loss reveals how gaps in oversight and collateral systems can quickly spiral into wider trouble. The situation also shows why DeFi projects need real-time visibility into their assets and stronger proof that reserves actually back what’s on-chain.
It also points to a deeper issue — many investors operate with limited information until something breaks. As the probe continues, the case stands as a reminder that without transparency and disciplined risk management, even well-known DeFi platforms can unravel fast.
Also Read: Sonic Labs Freezes Wallets Due to Detection of Suspicious Activity
