Elixir retires deUSD after Stream’s $93M loss
Decentralized finance liquidity provider Elixir has pulled the plug on its stablecoin deUSD after Stream borrowed the token to stabilize its own stablecoin.
- Elixir declared that it would be permanently retiring its deUSD stablecoin after the collapse of its major counterparty, Stream Finance, which owes the protocol $68 million after suffering a $93 million asset loss.
- As part of the process, the platform has halted all minting and redemptions of deUSD and sdeUSD in USDC. So far, as much as 80% of holders have already been repaid through redemptions.
On Nov. 6, Elixir announced that it would be retiring the stablecoin, stating it holds “no value and the stablecoin has been sunset.” As a result, the platform promises to conduct compensations in USDC, which is available for all deUSD holders and its derivatives including sdeUSD.
Users can claim compensation for holding deUSD through the protocol’s website, which directs holders and stakers of the token to connect their wallet if they wish to claim USDC (USDC) compensations. Though, it is not currently available deUSD holders on Sui (SUI) and Sei (SEI) as well as certain Automated Market Makers and Liquidity Providers.
According to data from CoinGecko, the stablecoin has depegged from the U.S dollar, having gone down in value nearly 100% in the past 24 hours. The synthetic stablecoin now holds a value of $0.026.
“deUSD holds no value and the stablecoin has been sunset. Please do not buy or make investments into deUSD, including through AMMs,” said the protocol.
So far, the firm has provided compensation for around 80% of current deUSD holders. However, this number does not include the tokens held by Stream Finance. According to the protocol, Stream holds approximately 90% of the remaining deUSD supply in circulation. At the moment, there are still more than 91.2 million deUSD in circulation.
As part of the process, the platform has halted all minting and redeeming infrastructure for the token as it plans to permanently retire the stablecoin “in the near future.”
“Any affected LPs in AMM pools or lending markets will be able to claim the full value of their position,” said Elixir.
Launched in mid-2024, deUSD is a syntethic stablecoin that is fully collateralized by staking tokens like stETH and sDAI. It was designed to compete with similar synthetic stablecoins in the space, such as USDe.
Why is Elixir sunsetting deUSD?
Two days ago, Stream Finance suffered a $93 million loss in net assets kept within the Stream fund according to its external asset fund manager. Though the exact cause of the incident is still under investigation, the DeFi solution has employed the help of Keith Miller and Joseph Cutler of the blockchain-focused law firm Perkins Coie LLP to handle the situation.
Because of the incident, the platform has decided to temporarily suspend all withdrawals and deposits, while pending deposits will not be processed in the meantime.
In the aftermath, Stream reportedly owes an estimated $285 million in debt to various lenders in the space. This debt includes about $68 million owed to Elixir. Not only that, Stream also borrowed deUSD to stabilize the value of its own failing stablecoin Staked Stream USD or XUSD.
As of Nov. 7, the XUSD value has dropped from $1 to $0.17.
According to Elixir’s statement, Stream Finance still holds about $75 million worth of deUSD while Elixir holds a similar portion of its remaining supply backed as a Morpho loan to Stream.
The platform claimed that Stream has decided not to repay or close their existing lending positions, which make up more than 99% of the total lending positions on-chain. As a result, the platform will collaborate with Euler, Morpho, Compound to distribute repayment of the Stream loan in an effort to liquidate the positions held by Stream.
“We still believe this will be honored 1 for 1,” said Elixir.
