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Stream Finance DeFi Collapse triggers a $93M loss, xUSD depeg, and liquidity risks across multiple lending protocols.
Author: Akshat Thakur
4th November 2025 – The Stream Finance DeFi Collapse has jolted the crypto ecosystem after the protocol disclosed a catastrophic $93 million loss tied to an external fund manager. The announcement on November 4, 2025, forced Stream to halt all withdrawals and deposits, causing its xUSD stablecoin to depeg sharply and raising concerns about systemic risk across interconnected DeFi platforms.
Stream Finance, a major yield-generation protocol with roughly $450 million AUM, revealed that a third-party manager overseeing a portion of its capital reported the loss. This disclosure triggered an immediate freeze on deposits and withdrawals as the team began emergency asset recovery and hired Perkins Coie LLP to lead a formal investigation.
The reliance on external centralized management contrary to DeFi’s ethos was a core point of criticism from the community, with users labeling the protocol a “black box” of hidden leverage and opaque off-chain custody.
The Stream Finance DeFi Collapse intensified when xUSD, the protocol’s stablecoin, slipped from its expected $1 peg to as low as $0.30. This represented one of 2025’s most severe depegs, with up to 70% drawdowns reported and roughly $160 million in user deposits left inaccessible.
Analysts estimated that underlying collateral may have evaporated by nearly half, explaining the severity of the depeg event.
The crisis deepened when on-chain analysts revealed Stream had around $285 million in active debt positions across Euler, Silo, and other lending protocols. These exposures now threaten a cascade of liquidity issues for multiple and vaults.
Elixir’s deUSD, for example, is 65% backed by Stream-related assets. While Elixir claims full redemption at $1, repayment depends on Stream’s recovery. Treeve’s scUSD and various rehypothecated vaults face similar uncertainty.
The Stream Finance DeFi Collapse has renewed skepticism of yield platforms that blend decentralized smart contracts with opaque off-chain management. Stream’s rapid climb from $40 million to $400 million AUM while promising steady 15% yields has now been labeled a red flag for undisclosed leverage.
The collapse adds to a difficult month for DeFi, following major incidents at Balancer ($116.6M exploit) and Garden Finance ($5.5M drain), pushing total sector losses above $215 million in days.
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