Elixir to Discontinue deUSD Synthetic Stablecoin After Stream Finance Loss

Global: Elixir to Discontinue deUSD Synthetic Stablecoin

Elixir, the developer behind the deUSD synthetic stablecoin, announced that it will cease issuance of the token following a reported $93 million loss by Stream Finance, a decentralized finance (DeFi) yield platform.

Background on Stream Finance Loss

Stream Finance disclosed a shortfall of $93 million, attributing the loss primarily to its lending activities. The platform currently owes Elixir $68 million and holds approximately $75 million worth of deUSD.

Redemption Plan for deUSD Holders

Elixir indicated that deUSD holders will be able to redeem their tokens for USDC through a structured process designed to prevent Stream Finance from liquidating deUSD without satisfying its outstanding loan.

Elixir’s Statement on Stream Finance

According to a statement from Elixir, “Stream comprised of 99%+ of the lending positions (and has decided to not repay or close positions).” The comment underscores the platform’s reliance on Stream Finance for the majority of its lending exposure.

Implications for Token Holders

The redemption mechanism is intended to protect investors by converting deUSD into a widely accepted stablecoin, USDC, thereby mitigating further exposure to Stream Finance’s financial difficulties.

Broader DeFi Context

The incident highlights the risks inherent in synthetic stablecoins that depend heavily on a single lending counterpart, especially in an environment where collateral and repayment mechanisms can be fragmented.

Market Reaction

While no immediate regulatory response has been reported, market participants are monitoring the situation closely, noting that the discontinuation may influence confidence in similar synthetic assets across the DeFi sector.

This report is based on information from Web3 is Going Great, licensed under Creative Commons Attribution 3.0 (CC BY 3.0). Analysis provided by Web3 is Going Great.