What happened? Stream Finance paused deposits and withdrawals after an external fund manager disclosed about $93 million missing.
Stream Finance said it is withdrawing all liquid assets and has hired lawyers from Perkins Coie to investigate the incident. The protocol froze deposits and withdrawals and warned that pending deposits will not be processed until the scope and cause are known. The disclosure triggered immediate defensive actions while the team works to assess losses and provide periodic updates.
Who does this affect? Depositors, XUSD holders, liquidity providers and counterparties tied to Stream Finance face direct risk from the outage and losses.
Anyone holding XUSD or funds in Stream’s vaults can’t access assets right now and may suffer devaluation after the stablecoin depegged sharply. Traders and liquidity providers on Arbitrum and other venues experienced heavy selling, liquidations and volatile price moves. Other DeFi projects and institutions that relied on Stream’s strategies or worked with its external manager could face contagion or counterparty exposure.
Why does this matter? The loss and depeg can widen market stress, force repricing of risk, and push capital toward safer, more transparent options.
A rapid XUSD depeg and a $93M hit undermine confidence in capital-efficient DeFi products and can trigger broader outflows from similar strategies. Expect tighter liquidity, wider spreads, more liquidations and increased demand for higher collateral or safer stablecoins. The episode also raises the odds of regulatory scrutiny and shifts toward less-levered, more transparent custody and manager arrangements in crypto markets.