Decentralized finance liquidity provider Elixir has pulled support for its synthetic stablecoin, deUSD, due to knock-on effects from Stream Finance’s $93 million loss earlier this week.
Elixir said in an X post on Thursday that it has already successfully processed redemptions of 80% of all deUSD holders, which has triggered the stablecoin to depeg from the US dollar to 1.5 cents, CoinGecko data shows.
Stream halted withdrawals on Tuesday after an external fund manager disclosed a $93 million loss in net assets, which included an estimated $285 million debt to various lenders, including about $68 million owed to Elixir.
Stream caused knock-on effects
Stream borrowed deUSD to stabilize its Staked Stream USD (XUSD) stablecoin, which fell as low as $0.10 after the protocol disclosed its $93 million loss.
Elixir’s deUSD launched in July 2024 and aimed to challenge the Ethena Labs-issued USDe as the leading synthetic stablecoin. It’s market cap was around $150 million before the token depegged.
Elixir claims Stream won’t pay it back
Elixir noted that Stream holds roughly 90% of the remaining deUSD supply, worth $75 million.
Related: Circle weighs in on GENIUS Act implementation: ‘Simple, strong rules’
However, it claims that Stream decided not to repay or close those positions, forcing Elixir to work with other decentralized lenders such as Euler, Morpho and Compound to pay out deUSD holders in full.
“We still believe this will be honored 1 for 1.”
Elixir decided to disable withdrawals in part to “remove any risk of Stream liquidating deUSD before repaying their loan.”
Stream Finance did not immediately respond to a request for comment.
Magazine: China officially hates stablecoins, DBS trades Bitcoin options: Asia Express
