At a Glance
- Stream Finance has temporarily suspended deposits and withdrawals following a reported $93 million loss in assets managed by an external fund manager.
- The DeFi protocol has initiated a legal investigation, led by attorneys from Perkins Coie LLP, to understand the extent of the loss and identify the cause.
- The protocol’s native stablecoin, XUSD, has experienced a significant depegging event, losing a substantial portion of its value against the US dollar.
- Stream Finance is withdrawing all liquid assets as part of its response to the incident, drawing parallels to other recent DeFi protocol vulnerabilities.
- The total value locked (TVL) on Stream Finance has seen a dramatic decrease, reflecting investor concerns and the impact of the asset loss.
Stream Finance Halts Operations Amidst Significant Asset Loss
Stream Finance, a decentralized finance (DeFi) protocol known for its yield-generating strategies, has reported a substantial loss of $93 million originating from one of its external fund managers. This significant financial setback has led the protocol to temporarily suspend all deposit and withdrawal functions. The company is actively conducting an investigation into the incident, enlisting the legal expertise of Perkins Coie LLP to conduct a thorough review.
In addition to suspending user transactions, Stream Finance has announced its intention to withdraw all liquid assets as the investigation progresses. This move comes as the protocol’s native staked token, Staked Stream USD (XUSD), has experienced a sharp decline in value. Data indicates that XUSD fell from approximately $0.86 to $0.30 and subsequently to $0.24 before stabilizing around $0.28 at the time of reporting—a drop of roughly 76% in 24 hours.
⚡ The protocol confirmed that until the investigation is concluded, no pending deposits or withdrawals will be processed. Over $160 million in user deposits has reportedly been frozen.
Legal Investigations Underway for Stream Finance
The DeFi protocol has formally launched a comprehensive legal investigation, appointing attorneys from Perkins Coie LLP to meticulously examine the circumstances surrounding the $93 million asset loss. Stream Finance stated that this decision underscores its commitment to robust corporate governance and transparency for its stakeholders. The company expects the investigation to conclude shortly and has pledged to provide timely updates as new information emerges.
Concerns regarding the protocol’s financial health had surfaced prior to this disclosure, with reports of discrepancies between its stated Total Value Locked (TVL) and data from DeFiLlama. These inconsistencies hinted at potential mismanagement or undisclosed leverage. Community speculation suggests that the external fund manager may have engaged in high-risk investments with customer funds.
💡 Stream Finance has not provided any evidence of external hacks or malicious attacks, leading to the belief that the issue may stem from internal factors such as inadequate risk management, human error, or unauthorized trading activities.
Stream Finance specializes in offering yield farming opportunities through market-making services and delta-neutral strategies, utilizing DeFi solutions and Decentralized Exchanges (DEXs). The protocol typically charges performance fees of up to 10%. However, data from DeFiLlama shows a significant drop in its TVL, falling from approximately $204 million in late October to around $98 million.
XUSD Depegging Exacerbates Industry Concerns
The depegging of XUSD was first flagged by PeckShield, which noted that the stablecoin had fallen over 60% below its intended peg. This instability has sent ripples across the DeFi ecosystem, particularly raising concerns for protocols like Euler, a crypto lending platform, whose oracle operations might be impacted if not updated promptly, potentially leading to bad debt accumulation.
📊 The deviation of XUSD from its peg has been fluctuating between 60% and 70%, according to real-time data from Coingecko.
The incident at Stream Finance occurs shortly after Balancer, another yield-focused DeFi protocol, reported losses exceeding $100 million due to a suspected hack. Analysts at Nansen identified the exploit, which involved the transfer of wstETH, WETH, and osETH to an unidentified wallet. Mikko Ohtamaa, co-founder and CEO of Trading Strategy, theorized that faulty smart contract checks, where concurrent transactions might have altered internal balance accounting, could be the root cause.
A recent report from PeckShield highlighted that 20 major DeFi platforms faced exploitation in September, resulting in a cumulative loss of over $127 million. Despite this figure, September’s losses represented a 22% decrease compared to August’s $163 million. Year-to-date losses in the DeFi sector for 2025 have surpassed $3 billion, with Bunni DEX being among the affected platforms.
Bunni DEX ceased operations entirely after reportedly losing over $8 million to hackers, a sum that reportedly made it impossible for the company to fund further security audits. However, the DEX assured its users that asset withdrawals remain possible, and token holders are expected to receive the remaining treasury funds.
Final Thoughts
Stream Finance is currently navigating a critical period following a significant asset loss reported by an external fund manager. The immediate suspension of services and the initiation of a thorough legal investigation underscore the severity of the situation. The depegging of its stablecoin, XUSD, further adds to the concern within the broader DeFi community, highlighting ongoing risks in yield-focused protocols.