Elixir liquidates deUSD stablecoin after Stream Finance’s $93 million losses

Key points:

• Elixir ends support for the deUSD stablecoin after Stream Finance loses $93 million.
• 80% of holders have already received payments, with the remaining funds to be compensated in USDC.
• The deUSD token plummeted 98%, sparking discussion about the risks of synthetic stablecoins.

The DeFi protocol Elixir has announced that it will discontinue support for the synthetic stablecoin deUSD following the collapse of Stream Finance, its largest borrower. The project has already redeemed about 80% of deposits and fixed the remaining balances for subsequent payments at a 1:1 ratio in USDC.

Source: X.com

The decision was made after Stream Finance suspended withdrawals on November 4. The fund’s external manager reported losses of $93 million and debts to creditors of $285 million, including $68 million owed to Elixir.

Stream Finance froze deposits and withdrawals after losing $93 million

Users faced a drop in the XUSD stablecoin and problems with withdrawals.

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The collapse of Stream Finance brought down deUSD

Stream Finance borrowed deUSD assets from Elixir to support its xUSD stablecoin, which fell below $0,20 after the losses were disclosed. Elixir disabled token issuance and exchange to avoid liquidation before completion.

According to the company, Stream owns about 90% of the deUSD supply — approximately $75 million. The remaining holders will receive compensation through a special portal after the asset return procedures are completed.

The fall of deUSD and market reaction

According to PeckShieldAlert, on November 7, the deUSD token plummeted by 98%. The report mentioned the @elixir account on X, but no official comments on the reasons for the fall followed.

Source: X.com

Before the depegging from the dollar, deUSD’s capitalization was approximately $150 million.

Implications for the DeFi market

The Elixir team claims that deUSD remains secured and that the protocol has begun the process of closing credit positions. Work is underway with Euler, Morpho, and Compound platforms to return assets and compensate users for their losses.

“Given that Stream comprised of 99%+ of the lending positions (and has decided to not repay or close positions), we will work with Euler, Morpho, Compound and the curators moving forward to help distribute repayment of the Stream loan to liquidate these positions. We still believe this will be honored 1 for 1,” the Elixir team said.

deUSD was positioned as a “truly decentralized” stablecoin and was used as collateral on lending platforms and in funds, including Hamilton Lane’s HLSCOPE tokenized fund.