On November 11, due to the collapse of the DeFi Stream Finance protocol, a BlockBeats whale told that they had over 100 million dollars deposited but could not withdraw it, and the platform currently has no follow-up solution.
According to the victim's statement to BlockBeats, they learned in early November from a news channel that Stream Finance revealed a loss of 93 million dollars on its official Twitter account, and only then did they realize that Stream Finance was in a financial solvency crisis, with a large amount of investors' funds frozen. They immediately attempted to withdraw but found that the protocol's liquidity had been completely drained.
The victim's assets are primarily distributed in the Euler protocol, holding approximately 82 million USD across three addresses. Additionally, 233.3 BTC (approximately 24.5 million USD) is stored in a silo, and the total amount of trapped funds exceeds 107 million USD. Currently, the deposit function in the Stream Finance protocol has been disabled, and user funds are in a completely frozen state. Due to the design mechanism of the protocol, withdrawal limits can only be released upon depositing new funds. However, in the case of disabling the deposit function, this mechanism has completely failed. Since the last tweet was posted on November 4, the official team has not released any further information or solutions.
In many victim rights protection groups, some investors have attempted to seize limited liquidity through technical means, with attempts even made using methods such as "bot racing." It is understood that some investors have been deceived by trusting others who claimed to provide technical assistance, leading to the misappropriation of deposit credentials and suffering losses, causing chaos within the community.
Previously, according to the analysis and estimation by independent DeFi analyst YieldsAndMore, the Stream Finance collapse event involved debt exposure across multiple DeFi protocols totaling 285 million USD, with TelosC ($123.6 million), Elixir ($68 million), and MEV Capital ($25.4 million) having the largest relationships. The team reported significant losses, an uncertain problem-solving approach, and possibly affected the more stable coins and liquidity pools. Research findings indicate that the largest individual risk exposure belongs to Elixir's deUSD, where the protocol lent 68 million USD to Stream, an amount that represents approximately 65% of the total deUSD reserves.
Given the decentralized nature of protocols like Euler, Morpho, and other affected parties, there is little room for intervention. A multi-party legal team is preparing to file a lawsuit, but the progress of the lawsuit and the likelihood of recovering funds is currently unclear. For trapped investors, the only option at this time is to stay informed through the official channels of the projects involved, as the timeline for asset thawing remains uncertain.
This event once again reveals the systemic issues in the DeFi ecosystem, such as repeated leverage, protocol contagion, and lack of risk management. Although the Stream team claimed that its position has "full recovery rights for every dollar," in extreme circumstances, this commitment depends on the liquidity and health of the underlying assets. Once the underlying assets default, this commitment becomes meaningless. Creditors have only learned about the comprehensive risk exposure through a third-party analysis after the fact, indicating a significant gap in risk disclosure and real-time auditing in the current DeFi ecosystem.
DeFi composition is a double-edged sword. It can efficiently recycle capital and increase returns in a bull market, but it also allows risks to penetrate multiple layers of protocols quickly, creating a complex web of risk exposure.
