Investigation Unveils $284 Million in DeFi Loans and Risks Associated with Stream Finance

Decentralized finance (DeFi) investigators have revealed over $284 million in stablecoin exposure and outstanding loans linked to Stream Finance following the company’s collapse.

On Tuesday, the DeFi group Yields and More (YAM) detailed numerous lending markets and vaults, including Euler, Silo, Morpho, and Gearbox, that connected to Stream’s synthetic assets such as xUSD, xBTC, and xETH.

The findings highlighted the extent of the impact with exposure loops including Elixir’s deUSD and Treeve’s scUSD, indicating that at least $284.9 million in total debt is outstanding across various markets. This figure excludes indirect liabilities from secondary vaults and other strategies.

The report mentioned that DeFi entities like TelosC, Elixir, MEV Capital, Varlamore, and Re7 Labs are involved, with TelosC reportedly having about $123 million in exposure and Elixir lending $68 million to Stream Finance, representing an estimated 65% of its stablecoin backing.

Source: Elixir

Translation: Source: Elixir

YAM cautions that more vaults and assets may be affected

Elixir also claimed to hold contractual rights for redemption at $1 per deUSD. Yet, Stream Finance has stated that repayments will delay until legal clarifications are made regarding who is owed funds.

These developments raise ongoing concerns about transparency within the DeFi sector’s high-yield structures. The interconnected nature of the involved protocols complicates the identification of final loss bearers.

“This is not a comprehensive list; many more stables/vaults could be impacted, and the accuracy of this information is not assured,” YAM stated.

Stream Finance’s reported $93 million loss

The exposure study coincides with Stream Finance’s announcement that it halted deposits and withdrawals after discovering a $93 million loss allegedly incurred due to an external fund manager.

The organization engaged Perkins Coie legal firm to assist in asset recovery but has not specified when it will resume normal operations.

Before the announcement, traders observed unusual delays and discrepancies in the total value locked (TVL) compared to aggregator DefiLlama’s reports. Following the announcement, Staked Stream USD (xUSD) quickly de-pegged to around $0.50, alarming users. As of the latest data from CoinGecko, the asset is trading at $0.33.