Stream Finance has halted all deposits and withdrawals after disclosing a $93 million loss connected to an external fund manager.
On November 4, 2025, Stream Finance announced that operations would be frozen until further notice following a major loss. The loss stems from activities by an external party responsible for managing a portion of Stream’s assets.
Stream has retained the law firm Perkins Coie LLP, specialists in blockchain-related investigations, to conduct a comprehensive review of the incident. Attorneys Keith Miller and Joseph Cutler will lead the legal inquiry.
How Stream Finance Responded
The protocol stated that all pending deposits remain unprocessed and that liquid assets have been withdrawn from affected operations. The investigation aims to assess the causes and the full extent of the loss before determining whether and how user claims could receive any settlement. They stated the community updates will be provided periodically as new findings emerge.
The fallout triggered the depegging of Stream’s native stablecoin, XUSD, which fell to $0.50, resulting in losses not just for XUSD holders but also users exposed through other synthetic tokens like xBTC and xETH.
Analysts estimate the overall debt exposure, when including both direct users and protocol lenders, may surpass $280 million. This situation puts hundreds of millions in collateral and linked lending protocols at risk.
What This Means for the Industry
Industry stakeholders have emphasized that Stream Finance’s reliance on third-party management has highlighted broader issues of trust and governance in DeFi infrastructure.
The event coincided with recent breaches at other protocols, including Balancer and Garden Finance, fueling ongoing debate about risk concentration and the fragility of complex DeFi platforms. Stream Finance’s stablecoin and synthetic assets serve as collateral across multiple lending platforms, amplifying losses far beyond the protocol itself.
Settling between various token holders and lenders, particularly amid widespread depegging, will be complex. Exposure is not confined to Stream assets alone, but also to third-party stablecoins that interact with Stream’s ecosystem, such as deUSD and scUSD.
Platforms, including Euler, Morpho, and Silo, all of which have tied lending markets, face indirect exposure to Stream’s systemic risk. As a result, DeFi market stress and trust concerns are likely to persist until the investigation identifies the root causes and clarifies any pathway for user compensation.
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