DeFi’s Dependence on External Parties Highlighted by Stream Finance’s $93 Million Emergency

Stream Finance, a DeFi platform focused on maximizing yield and improving capital efficiency, has halted all deposits and withdrawals after an external asset manager reported a $93 million loss in managed funds, as reported by

. The company has launched a forensic review, led by , a law firm with a track record in major blockchain deals, to uncover the reasons behind the deficit and work toward restoring normal operations.

The issue surfaced when it was revealed that an external manager responsible for Stream’s funds had incurred a loss of about $93 million. In reaction, Stream Finance quickly suspended all fund movements and started retrieving liquid assets to prevent further damage. The platform has brought in Keith Miller and Joseph Cutler from Perkins Coie to oversee the inquiry, stressing openness and frequent communication as the situation develops, according to

.

This significant loss caused StakedStreamUSD (XUSD), Stream Finance’s stablecoin, to lose its peg and drop by around 23%. The resulting instability has heightened worries about the platform’s financial health and ability to withstand shocks. Blockchain security firm PeckShield identified the de-pegging as a major warning sign, highlighting the broader risks to the DeFi ecosystem when a core asset fails.

Perkins Coie’s participation demonstrates the firm’s expanding influence in the digital asset industry. Only weeks earlier, the firm advised Apex Treasury Corp. on a $344.7 million expanded IPO centered on blockchain and crypto acquisitions. That IPO, listed on Nasdaq as APTXU, showcases Perkins Coie’s expertise in navigating digital asset regulations. Still, the contrast between Apex’s successful capital raise and Stream Finance’s current troubles brings attention to the risk management challenges faced by DeFi projects that depend on third-party fund managers.

The turmoil at Stream Finance highlights ongoing issues in DeFi, where rapid innovation and unclear governance often outstrip regulatory controls. The platform’s use of external managers—a common practice in DeFi for accessing advanced strategies—has now become a point of concern. Industry experts suggest this event may lead to tighter due diligence standards for DeFi platforms, especially those handling substantial liquidity.

Stream Finance has yet to reveal which specific strategies or protocols contributed to the loss, nor has it announced when normal services might resume. Stakeholders are waiting for more information on whether the loss was due to market volatility, operational mistakes, or possible wrongdoing. Meanwhile, the wider crypto community is watching closely, with the XUSD de-pegging serving as a clear example of the vulnerabilities of algorithmic stablecoins.

As the inquiry continues, Stream Finance’s future credibility will hinge on its openness and the success of its corrective measures. The situation also highlights the importance of strong governance in DeFi, where the lack of centralized control can both create opportunities and expose significant risks.