Stream Finance’s XUSD Stablecoin Loses Peg After $93M Loss

The crisis began when Stream Finance revealed that an external fund manager had lost approximately $93 million in managed assets, triggering a rapid depegging of its XUSD stablecoin. According to data from CoinGecko, XUSD plummeted to a record low of $0.30, representing a 62% decline from its intended $1.00 peg. Blockchain security firm PeckShield first flagged the issue, noting an initial 23% drop that deepened to 58% within a single hour.

At the time of reporting, XUSD was trading around $0.48, maintaining its 62% decline over the previous 24 hours. The stablecoin’s market capitalization stood at approximately $95.6 million, with trading volume reaching $1.59 million during the same period. Both 7-day and 30-day performance metrics mirrored the sharp decline, showing consistent 62% downturns that underscore the severity of the depegging event.

In response to the crisis, Stream Finance immediately suspended all deposits and withdrawals while launching a full investigation. The protocol has retained attorneys Keith Miller and Joseph Cutler of Perkins Coie LLP to lead the probe and has begun withdrawing all remaining liquid assets as a precautionary measure. The company stated that its decision to hire Perkins Coie reflects its ‘commitment to transparency and corporate governance’ during the investigation.

The Stream Finance incident represents the latest in a series of major security failures plaguing the decentralized finance sector. The collapse comes immediately following a $128 million exploit on Balancer V2, one of the industry’s longest-running protocols. The Balancer attack also affected several protocol forks, though StakeWise DAO confirmed successful recovery of 73.5% of affected funds in collaboration with security experts from Balancer and Gnosis Chain, returning over $20 million worth of stolen assets to users.

According to recent data from PeckShield, September alone witnessed more than 20 major exploits on DeFi platforms, resulting in collective losses exceeding $127 million. While this figure represents a 22% decrease from August’s $163 million in losses, it has pushed 2025’s total crypto losses above the $3 billion threshold. The Bunni decentralized exchange became one of the latest casualties, shutting down completely after an $8.4 million hack left the team unable to cover new security audit costs.

The Bunni team announced that users would still be able to withdraw their assets and that remaining treasury funds would be distributed to token holders. This pattern of protocol failures followed by partial recoveries and shutdowns highlights the ongoing fragility within the DeFi ecosystem, where security vulnerabilities continue to outpace protective measures despite increasing institutional involvement and regulatory scrutiny.

The XUSD depegging event stands as one of the most significant stablecoin failures of 2025, raising serious questions about the risk management practices employed by DeFi protocols utilizing external fund managers. The $93 million loss through a third-party manager represents a fundamental breakdown in the oversight mechanisms that should protect user funds in decentralized finance systems.

The consecutive major incidents involving Stream Finance, Balancer V2, and Bunni DEX demonstrate that security remains the primary challenge for DeFi adoption. While the sector has seen technological advancements and increased institutional participation, these high-profile failures underscore the persistent vulnerabilities that continue to threaten user assets and market stability. The pattern suggests that despite improved security tools and auditing practices, determined attackers and operational failures continue to find weaknesses in DeFi infrastructure.

As investigations into the Stream Finance loss continue and the DeFi community assesses the broader implications, the incident serves as a stark reminder of the inherent risks in algorithmic and staked stablecoins. The rapid depegging and subsequent trading at distressed levels highlight the fragility of confidence-dependent assets in the cryptocurrency ecosystem, potentially influencing regulatory approaches and institutional participation in the DeFi space for the remainder of 2025.