Decentralized Finance Platform Elixir Shuts Down Stablecoin deUSD Following Stream Finance’s $93 Million Loss
Decentralized financial liquidity provider Elixir has announced the permanent decommissioning of its stablecoin, deUSD, after Stream Finance borrowed the token to stabilize its own failing stablecoin, resulting in a significant loss of $93 million.
The decision to retire deUSD comes after Stream Finance, Elixir’s main counterparty, suffered a substantial loss of $93 million in net assets, leaving it with an estimated debt of $285 million to various lenders in the industry, including $68 million owed to Elixir. As a result, Elixir has stopped all minting and redemptions of deUSD and sdeUSD into USDC, with approximately 80% of holders already repaid through redemptions.
According to Elixir, deUSD has “no value and the stablecoin has expired,” and the platform promises to conduct compensation in USDC, available to all deUSD holders and its derivatives, including sdeUSD. Users can claim compensation for holding deUSD via the protocol’s website, although this is currently not available to deUSD holders on Sui (SUI) and Sei (SEI), as well as certain automated market makers and liquidity providers.
Background and Consequences
The synthetic stablecoin, deUSD, has decoupled from the US dollar and lost almost 100% of its value in the last 24 hours, currently worth $0.026, according to data from CoinGecko. Elixir has instructed holders not to purchase or invest in deUSD, including through automated market makers (AMMs). The company has compensated around 80% of current deUSD holders, excluding tokens held by Stream Finance, which holds approximately 90% of the remaining circulating deUSD supply.
Launched in mid-2024, deUSD is a synthetic stablecoin fully collateralized by staking tokens such as stETH and sDAI, designed to compete with similar synthetic stablecoins in the space. The platform has suspended all minting and redemption infrastructure for the token and plans to permanently decommission the stablecoin “in the near future.” Elixir has assured that all affected liquidity providers (LPs) in AMM pools or credit markets can claim the full value of their position.
Stream Finance’s $93 Million Loss and Its Impact
Stream Finance’s loss of $93 million in net assets has led to a significant debt of $285 million to various lenders, including $68 million owed to Elixir. The exact cause of the incident remains under investigation, with the DeFi solution enlisting the help of Keith Miller and Joseph Cutler of blockchain-focused law firm Perkins Coie LLP to address the situation. As a result, Stream has temporarily suspended all withdrawals and deposits, with pending deposits not being processed in the meantime.
Stream’s decision not to repay or close its existing loan positions, representing more than 99% of the total loan positions on the chain, has led Elixir to work with Euler, Morpho, and Compound to distribute the repayment of the Stream loan, thereby liquidating the positions held by Stream. Elixir remains confident that the repayment will be honored one-on-one.
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