Decentralized finance liquidity provider Elixir has ceased support for its synthetic stablecoin, deUSD, following significant repercussions from Stream Finance's substantial $93 million loss earlier this week. This move comes as Elixir seeks to mitigate further risks associated with Stream's financial distress.
Key Takeaways
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Elixir has discontinued support for its deUSD stablecoin.
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The decision is a direct response to Stream Finance's reported $93 million loss.
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Stream Finance owed Elixir approximately $68 million.
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Elixir has successfully processed redemptions for 80% of deUSD holders.
The Impact of Stream Finance's Loss
Stream Finance halted withdrawals on Tuesday after an external fund manager revealed a $93 million deficit in net assets. This situation also included an estimated $285 million in debt to various lenders, with Elixir being owed around $68 million.
Stream had utilized deUSD to bolster the stability of its own synthetic stablecoin, Staked Stream USD (XUSD). However, following the disclosure of the $93 million loss, XUSD plummeted to as low as $0.10.
Elixir's Response and deUSD's Fate
Elixir announced its decision to sunset deUSD via an X post on Thursday. The protocol has already managed to facilitate redemptions for 80% of deUSD holders. This action has contributed to deUSD losing its peg to the US dollar, trading at approximately 0.04 cents according to CoinGecko data.
Launched in July 2024, Elixir's deUSD aimed to compete with established synthetic stablecoins like Ethena Labs' USDe. Prior to its depegging, deUSD boasted a market capitalization of around $150 million.
Unresolved Debts and Risk Mitigation
Elixir highlighted that Stream Finance currently holds approximately 90% of the remaining deUSD supply, valued at $75 million. Crucially, Elixir claims Stream has opted not to repay its loans or close these positions. This has compelled Elixir to collaborate with other decentralized lending platforms, including Euler, Morpho, and Compound, to ensure full payouts for deUSD holders.
To prevent Stream from liquidating deUSD before settling its debt, Elixir made the decision to disable withdrawals. Stream Finance has not yet responded to requests for comment regarding these developments.
Sources
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Elixir sunsets deUSD stablecoin in reaction to Stream’s $93M loss, TradingView.
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Elixir sunsets deUSD stablecoin in reaction to Stream’s $93M loss, ADVFN.
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