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Crypto Reporter
Shalini Nagarajan
Crypto Reporter
Shalini Nagarajan
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Stream Finance has suspended deposits and withdrawals after an external fund manager oversaw the protocol’s funds disclosed a loss of about $93 million in the fund’s assets, it said on Tuesday.
The team said it has retained Keith Miller and Joseph Cutler of law firm Perkins Coie to investigate the incident.
“We are actively withdrawing all liquid assets and expect this process to be completed in the near term,” Stream said, adding that periodic updates will follow as more information becomes available.
Until the extent and cause of the loss are known, Stream said all withdrawals and deposits remain on hold. “Any pending deposits will not be processed at this time,” the statement said.
Stablecoin XUSD drops as traders rush to exit after disclosure of loss
The announcement struck a chord in the protocol ecosystem. First, it is stacked stablecoin XUSD broke from its $1 peg, falling as much as 58% in 24 hours. Traders pointed to heavy selling on Arbitrum-based venues as confidence fell.
The disclosure went live around 12.45pm UTC, in a window that also saw reports of a great multichain exploit on Balancer. While the events seemed unrelated, the overlap in timing amplified anxiety in pockets of DeFi and accelerated defensive positioning.
Within hours, aggressive XUSD to USDC trading on Camelot and Uniswap took XUSD from $1 to $0.92. As Stream confirmed the freezing of deposits and withdrawals pending investigation, the offers reduced and the price fell further.
Between 6.00 pm UTC on November 3 and 2.00 am UTC on November 4, liquidations and arbitrage pressure pushed XUSD to about $0.43.
No Evidence of Outright Exploitation, But Leverage Concerns Deepen
Chain watchers framed the slide as a shock to confidence rather than a confirmed smart contract failure. They noted that commercial activity on Arbitrum dominated the move, with no direct evidence of a protocol exploit at the time of writing.
Concerns about support have intensified on social media. An X user claimed that the data on the chain show about $170 million in asset support against about $530 million in outstanding loans, which implies a leverage over four times. These figures could not be independently verified in real time.
Stream was launched in early 2024 with a pitch of capital efficient strategies that mix DeFi and traditional market techniques. Users deposit the USDC at once and receive XUSD, which targets performance through activities such as loan arbitrage, incentive farming and hedged market creation. The protocol also works with external managers when the internal capacity is exceeded.
The model helped Stream grow rapidly until 2025, but the trust of external counterparties is now at the center of the investigation.
