Stablecoins Face Turmoil as Stream Finance Collapses

The DeFi sector faced a significant setback as Stream Finance’s xUSD stablecoin collapsed after a $93 million loss, leading to $1 billion in stablecoin outflows across multiple platforms.

This liquidity crisis underscores ongoing vulnerabilities in DeFi, impacting major protocols and raising concerns about stablecoin stability in the cryptocurrency market.

Stream Finance’s Loss Spurs Largest Outflow Since 2022

The collapse of Stream Finance’s xUSD was triggered by a loss of $93 million, involving a risky move by an external fund manager during turbulent market conditions. Stream Finance has hired Keith Miller and Joseph Cutler to investigate the incident comprehensively. Attention quickly focused on other protocols like Coinshift and Elixir. Their stablecoin assets, interlinked with Stream, experienced severe liquidity shortages, mirroring similar financial distress seen in 2022.

Immediate market impact includes the severe decline in total value locked (TVL) for key DeFi protocols. Coinshift’s csUSDL saw its TVL diminish by 95%, leaving just $1.92 million, and Elixir faced liquidity issues, resulting in a critical fall in its stablecoins deUSD and sdeUSD. Euler suffered a significant $137 million hit in bad debt.

“…just one conversation with them and five minutes of browsing their Debank account is enough to realize that this is going to end badly.” — Schlag, Yearn Finance

Regulations and Community Call for DeFi Transparency

Did you know? The $1 billion outflow this week marks the largest stablecoin crisis since the collapse of UST in 2022, highlighting the ongoing vulnerabilities in decentralized finance.

StraitsX USD (XUSD) has maintained its price at $1.00, according to CoinMarketCap data on November 7, 2025. The cryptocurrency showed minimal volatility with a 0.01% price increase over 24 hours, supported by a notable 24-hour trading volume surge of 287.76%, reaching $88.46 million, although its market dominance remains at 0.00%.

Coincu’s research suggests regulatory frameworks may evolve rapidly following these events, focusing on improving the transparency of asset backings. Historical data indicates systemic risks tied to synthetic assets and interconnectedness amplify financial shocks, calling for enhanced oversight within the DeFi sector.