DeFi Protocol Stream Finance Faces $93M Crisis - Withdrawals Frozen Amid Security Breach

Another day, another DeFi disaster—Stream Finance just joined the $100 million club of crypto casualties.

The Protocol Bleed

Smart contracts supposedly smarter than traditional finance just proved otherwise. Stream Finance's infrastructure sprung a leak that drained $93 million from user funds—enough to make even seasoned crypto veterans wince.

Damage Control Mode

The protocol slammed emergency brakes on all withdrawals. That classic 'your money's safe, just inaccessible' move that never fails to inspire confidence. Team claims they're 'working around the clock'—because nothing says security like round-the-clock panic mode.

Market Fallout

Token prices tanked faster than a leveraged long position during a bear market. Liquidity pools evaporated, yield farmers got rekt, and the usual 'this is good for Bitcoin' crowd went suspiciously quiet.

Same Story, Different Protocol

Another week, another nine-figure crypto heist—at this rate, decentralized finance might need to reconsider that 'finance' part. The only thing growing faster than DeFi adoption appears to be the size of these exploits.

Stablecoin XUSD Plunges as Traders Rush to Exit After Loss Disclosure

The announcement hit sentiment across the protocol’s ecosystem. Earlier, its staked stablecoin XUSD broke from its $1 peg, dropping as much as 58% in 24 hours. Traders pointed to heavy selling on Arbitrum-based venues as confidence slipped.

The disclosure went live around 12.45 pm UTC, in a window that also saw reports of a large multichain exploit on Balancer. While the events appear unrelated, the overlap in timing amplified anxiety across pockets of DeFi and accelerated defensive positioning.

Within hours, aggressive XUSD-to-USDC swaps on Camelot and Uniswap drove XUSD from $1 to $0.92. As Stream confirmed the freeze on deposits and withdrawals pending the investigation, bids thinned and the price slid further.

Between 6.00 pm UTC on Nov. 3 and 2.00 am UTC on Nov. 4, liquidations and arbitrage pressure pushed XUSD to about $0.43.

#PeckShieldAlert Staked Stream USD $XUSD has depegged, down ~58%. @StreamDefi https://t.co/otLGs1Ti9t pic.twitter.com/lziLZj2QSO

No Evidence of Direct Exploit, But Leverage Concerns Deepen

On-chain watchers framed the slide as a trust shock rather than a confirmed smart contract failure. They noted that trading activity on Arbitrum dominated the move, with no direct evidence of a protocol exploit at the time of writing.

Concerns over backing intensified on social media. One X user claimed that on-chain data showed roughly $170m in supporting assets against about $530m in outstanding loans, implying leverage above four times. Those figures could not be independently verified in real time.

Stream launched in early 2024 with a pitch of capital-efficient strategies that blend DeFi and traditional market techniques. Users deposit USDC into a vault and receive XUSD, which targets yield through activities such as lending arbitrage, incentive farming and hedged market making. The protocol has also worked with external managers when internal capacity is exceeded.

The model helped Stream grow quickly through 2025, but reliance on external counterparties now sits at the center of the investigation.