"Stream Finance incident increases risk of cascading damage to other protocols"

DeFi analysts estimate that the scale of loan and stablecoin exposure related to the Stream Finance incident exceeded $284 million.

On the 4th (local time), Cointelegraph reported that DeFi research group 'Yields and More (YAM)' said that tracking the asset structure related to Stream Finance revealed a complex network of links between major lending platforms and derivative stablecoins.

According to the report, multiple lending protocols and vaults such as Euler, Silo, Morpho, and Gearbox are exposed to Stream's synthetic assets. Several stablecoins, including Elixir's deUSD and Treeve's scUSD, are intertwined in a cascading structure, and at least $284.9 million in liabilities are estimated to exist across the market.

The report added, "This list is not exhaustive and it is likely that more stablecoins and vaults were affected." In particular, TelosC's exposure is about $123 million, and Elixir lent $68 million to Stream, which corresponds to about 65% of its stablecoin collateral.

This incident has again highlighted the lack of transparency within DeFi's high-yield infrastructure. Due to mutual exposure between the multi-layered lending market and derivative stablecoins, it is difficult to clearly determine who ultimately bears the losses.

Stream Finance previously announced it halted deposits and withdrawals after disclosing a $93 million loss caused by the mismanagement of an external fund manager. The company has hired law firm Perkins Coie to investigate but did not give a timeline for resuming normal operations. According to CoinGecko, Stream's stablecoin Staked Stream USD (xUSD) is currently trading around $0.33.