Elixir deUSD Collapse After $93M Stream Finance Loss
Elixir has suspended its deUSD stablecoin following the deUSD collapse triggered by Stream Finance’s $93 million loss, which drove its price down 97% to $0.015. The deUSD collapse prompted Elixir to process 80% of redemptions before pausing minting and withdrawals to shield holders. Stream Finance halted withdrawals following an external asset wipe, leaving the platform with $285 million in debt and its xUSD stablecoin plummeting to $0.10. Stream still owes Elixir approximately $68 million and holds 90% of the remaining deUSD supply. Elixir will snapshot undeclared deUSD and sdeUSD balances, launch a redemption portal, and collaborate with DeFi lenders Euler, Morpho, and Compound to liquidate positions and ensure a 1:1 swap to USDC. This deUSD collapse underscores the systemic risk of interconnected DeFi protocols and raises fresh concerns over stablecoin resilience. Ahead of potential contagion, Circle has called on the US Treasury under the GENIUS Act for uniform regulation, while Coinbase and other stakeholders push for robust oversight and fully backed stablecoins.
Bearish
In the short term, the deUSD collapse is likely to exert bearish pressure on the stablecoin and broader DeFi market. Traders may reduce exposure to synthetic stablecoins, driving increased redemptions and liquidity shortages in protocols, while risk-off sentiment spreads across DeFi. The rapid depeg and unresolved $68 million owed by Stream Finance heighten uncertainty around collateral coverage, prompting cautious behavior and potential sell-offs. Over the long term, however, the successful execution of 1:1 USDC redemptions and clarifications on regulatory frameworks (such as calls under the GENIUS Act) could stabilize confidence in synthetic stablecoins. Yet lingering concerns about interconnected DeFi exposures and future bad-debt events suggest that the market may adopt a more conservative stance, dampening growth prospects and innovation in the segment. Overall, the news sends a negative signal on stablecoin risk management and is bearish for deUSD-related trading activity.