DeFi’s Delicate Network: Elixir Recovers Following $93M Crash

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DeFi’s Delicate Network: Elixir Recovers Following $93M Crash

Bitget-RWA2025/11/07 05:30

By:Bitget-RWA

- Elixir opens USDC redemption for deUSD after Stream Finance's $93M loss triggers 77% depeg. - 80% of deUSD holders redeemed tokens; remaining processed via claims portal as minting halts to prevent liquidation risks. - Elixir partners with Euler, Morpho, and Compound to liquidate Stream loans, pending legal creditor prioritization. - DeFi contagion prompts Compound to pause stablecoin markets, highlighting systemic risks in cross-protocol lending. - Elixir asserts full liability backing but underscores f

Elixir, a decentralized finance liquidity protocol, has introduced a 1:1

USDC

redemption option for its deUSD stablecoin after the downfall of Stream Finance’s

xUSD

stablecoin, which resulted in users losing $93 million. By November 7, Elixir stated that about 80% of deUSD holders (excluding those with deUSD through Stream Finance) had already exchanged their tokens for USDC, with the rest to be processed via a new claims portal and

official redemption channel

. To reduce liquidation risks and ensure a smooth closure of the stablecoin, the protocol has halted both minting and redemption, according to a

Phemex report

The crisis started on November 4 when Stream Finance, a decentralized lending service, revealed that an external fund manager had lost $93 million in user funds, causing xUSD to lose its peg by 77% and drop to $0.26, as reported by

Yahoo Finance

DeFi’s Delicate Network: Elixir Recovers Following $93M Crash image 0

This event exposed weaknesses in DeFi’s interconnected lending structure, with Elixir’s deUSD stablecoin having $68 million in USDC lent to Stream—representing 65% of its reserves—according to a

CoinMarketCap analysis

. Elixir has since recorded the remaining deUSD and sdeUSD balances and is working with protocols such as

Euler

Morpho

, and

Compound

to liquidate Stream’s loans and support redemptions, as detailed in a

FinanceFeeds report

Currently, Stream holds nearly 90% of the deUSD supply (around $75 million), and most of Elixir’s remaining collateral is tied up in Morpho loans to Stream, according to an

Odaily update

. The protocol has claimed full redemption rights at $1 for its lending position but clarified that payouts will only proceed after legal advisors determine the order of creditors, as reported by

Yahoo Finance

. Elixir has also cautioned users to avoid unofficial platforms and use only the official redemption channel to steer clear of scams.

The incident has had a ripple effect throughout DeFi, leading Compound to temporarily suspend several stablecoin markets on

Ethereum

, including USDC, USDS, and USDT, to address liquidity concerns linked to Elixir’s deUSD and sdeUSD, according to a

LookonChain post

. Experts point out that this collapse is reminiscent of previous DeFi failures such as Terra’s UST and Iron Finance, highlighting the systemic dangers of leveraged, cross-protocol lending, as discussed in the FinanceFeeds article. Elixir’s prompt move to redeem 80% of deUSD and halt further minting is intended to contain the fallout and safeguard holders, according to a

LookonChain notice

Despite the turmoil, Elixir insists that all deUSD obligations are fully collateralized and that redemptions will be honored at face value. The protocol’s response highlights the vulnerability of synthetic stablecoins that depend on complex collateral structures, as trust in unbacked DeFi assets continues to decline, a point also raised in the FinanceFeeds report.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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