Stream Finance and Elixir witnessed a dramatic collapse, leaving investors with significant losses. Initially valued at $250 million, the stablecoin Stream Finance offered lost over 90% of its value within days. This occurred after an undisclosed loss of approximately $93 million in assets, according to their recent announcements. The incident underscores how even seemingly stable coins can be vulnerable to market fluctuations and unexpected events. We look at why this happened, examining the interplay between Stream Finance and Elixir’s stablecoin offerings and how these dynamics ultimately led to the collapse.
The collapse began after Stream Finance revealed a loss of $93 million in assets on 4th November. At the same time, their claims of a massive $400 million proof of reserves failed to offset the losses. This triggered panic within the community, leading to a significant drop in the value of their XUSD stablecoin, which plummeted by over 90% to just $0.11. The loss directly affected Elixir, who had exchanged 90% of their own XUSD for deUSD. This exchange, combined with the rapid devaluation of Stream’s XUSD led to a cascade effect, ultimately causing Elixir to abandon its use of deUSD and later discontinue it altogether.
Elixir used a complex system involving Euler, Morpho, and Compound to allow 80% of users to deposit and withdraw USDC based on their claims. While the specifics of how Elixir intends to repay these entities remain unclear, a claim portal has been opened for affected users to receive USDC compensation. 24/7 support is available for anyone experiencing financial hardship due to the collapse.
This incident serves as a stark reminder of the inherent risks associated with cryptocurrencies and stablecoins, demonstrating the vulnerability of even seemingly secure assets to unforeseen market events.
The post How Stream Finance and Elixir Collapsed? appeared first on Altcoin Buzz.