The DeFi space was rocked this week after it was discovered that Elixir, a major DeFi platform, had decided to (officially) cease support for its synthetic stablecoin offering deUSD. The move comes after Stream Finance’s revelation that it had lost $93 million on November 4, 2025 — an event which has laid bare the extreme fragilities based on collateral concentration and hidden risk management within a series of connected protocols.
Background: A $93 Million Loss at Stream Finance
Stream Finance, which has made a name for itself in marrying traditional finance tactics with on-chain yield optimization, announced that an outside fund manager took a $93 million hit to its Stream Fund. Exactly why — whether because of mismanagement, volatility or something altogether else — is still under investigation, but the fallout was swift:
- Frozen all deposits and withdraws maintenance to prevent any loss of remaining funds.
- U.S. law firm Perkins Coie LLP, led by Keith Miller and Joseph Cutler, were hired for an independent investigation.
- Stream Finance promised continuing community updates and has started to sell off all liquid assets.
Elixir’s Response: Sunsetting deUSD
Stablecoin deUSD, Elixir’s “synthetic stablecoin”, was underwritten almost entirely by Stream Finance positions: 90% of total deUSD supply and 99% of its lending exposure sat against that same counterparty. As the value of Stream’s fund sank below zero, about 65% of deUSD’s collateral base disappeared. To prevent further contagion, Elixir:
- Declared that deUSD “has no value” and ended all issuance or backing.
- Worked with other lending protocols (Euler, Morpho, Compound) to aggregate and align efforts for liquidations and reclaiming funds.
- Warned that unredeemed positions could result in remaining deUSD holders taking losses, emphasizing the risk of collateral concentration.
The Chain Reaction: XUSD Depeg and the Fallout
Running through a scenario — at first was worried about not being able to participate in the BOMB party, but now I worry that this will happen instead.
The shockwave extended beyond deUSD. Stream’s native stablecoin, XUSD, fell out of parity with the US dollar to drop as low as $0.50. Other synthetic tokens (xBTC, xETH) faced similar drawdowns. Investors, ranging from individuals to fund managers and corporates, weren’t able to withdraw funds or deploy them elsewhere — and they rushed to figure out their exposed exposure – driving the broader market volatility and a crisis of confidence in synthetic stablecoins.
Lessons for DeFi Risk Management
Oracles will always be risky.
This episode underscores a few pressing lessons for decentralized finance, or crypto lending:
Collateral Risk and Concentration
Overdependence on one fund manager or protocol can lead to systemic failure when losses hit. Mechanisms should diversify the supporting assets.
Governance and Transparency
Non-transparent fund structures make real-time risk evaluation difficult. Strong on-chain dashboards and upfront exposure mechanisms can facilitate a more rapid response.
Crisis Response Protocols
Legal investigations (like the one conducted by Perkins Coie LLP) are important but sluggish. DeFi governance structures need to have pre-specified triggers and community-based bailouts.
Stablecoin Fragility
DAIsayers need strong overcollateralized reserves if they are to be hard synthetic pegs. Protocols need to stress-test for market stress and take account of counterparty failure.
What Affected Users Should Do
If you had deUSD, XUSD and related tokens — these are the things to do:
Document Holdings
Get screenshots of your wallet balances and transaction histories — these will be crucial for any future repayment or recovery.
Monitor Official Channels
Get updates from Stream Finance and Elixir on Twitter, Discord or their on-chain governance forums.
Exercise Caution
Suspend further deposits until the final investigation report is released and compensation plans are made clear.
Related How to Start Investing in Crypto in 2025: A Beginner’s Guide
Conclusion: Securing the Future of DeFi
Escape Playbook — $93 Million Burn at Stream Finance & Elixir’s Retirement of deUSD underscore the systemic risk around:
@ collateral concentration, opaque governance and stablecore (stablecoin) depegs Ago 19, Share Cole Kennelly (ALOADN ROOTS) Reduce Holdings AROUND ADG RESTRICTED PRIVATIZATION AGREEMENT REFUSED ISSUANCE OF SHARES WIL pag Effective as of.
As DeFi grows up, participants will need to call for better risk-management structures, diversified pools of collateral and clear on-chain monitoring tools. It is only then that decentralized finance would make good on its promise of a strong and censorship-resistant financial system — and not allow history to repeat itself.
