Re7 Labs Faces Backlash for Event Summary Report—Where’s the Solution?
Re7 Labs draws criticism as stakeholders demand action—not just post-mortems.
When summaries replace solutions: Crypto community slams 'report card' approach to crises.
While rivals build, Re7 documents—a classic case of analysis paralysis in Web3.
*Insert eye-roll about 'transparency theater' here*
Details from Re7 Labs’ post
The long post from Re7 Labs details the steps the team has been taking to mitigate risk and, where feasible, to prevent or minimize potential losses.
The post detailed things like what happened, the actions the team took afterward, and the current status of things in the xUSD Euler Markets, deUSD, and sdeUSD markets on Plume, and sUSDX and USDX markets on BSC.
In all three cases, Re7 Labs claimed to have noticed something was wrong, even though no proactive action was taken until after the market crash.
For example, with xUSD, it was not until after the market crash on October 10 that Re7 Labs’ due diligence had complaints that were so easily brushed aside with assurances from Stream’s CEO of stability.
In Elixir’s case, the team let borrowing in Re7 Labs Euler Earn USDT0 vault on Plasma go on until it became uncomfortable, after which it allegedly asked Elixir to start to pay back some of the outstanding debt.
Still, it was not until after it was found that Stream was borrowing against Elixir assets that the team took real action, introducing reduced caps and reallocated funds. Meanwhile, Elixir repaid the sdeUSD position on Plume by November 6, eliminating Re7-curated exposure.
As for Stable Labs, the Re7 Labs team claimed to have caught discrepancies on November 4, but when the team reached out to ask them to “justify how they could afford to borrow at those rates and why they weren’t unwinding those positions,” they got no meaningful response.
Since there was no further action, Re7 Labs set a strict deadline demanding repayment of all outstanding positions by November 5. The next day, on November 6, all that came from the CEO were contradictory statements, which prompted Re7 Labs to disable borrowing and reduce LLTVs/fees.
It has also demanded liquidity deposits into specific markets to enable users to unwind their positions. However, no response has been received.
To conclude the post, Re7 Labs claimed its role as a curator has limitations, but that the team will continue to actively look for ways to resolve these issues while providing timely updates.
Community response to the Re7 Labs update
The update was supposed to be a lengthy tell-all to quell much of the anger brewing against Re7 Labs as a curator, but it has had the opposite effect.
Its role as curator meant Re7 Labs had the responsibility of setting the lending parameters, collateral limits, and risk controls in vaults where users deposited stablecoins like USDT0, exposing them to these borrowers.
While the team made it seem like it was able to spot issues quickly and attempt to rectify them, the report has revealed an important fact that many users did not fail to point out in the comment section; the team failed in its job as a curator.
Not only did it take the words of Stream Finance’s CEO of stability at face value, but users say it could have done better due diligence as a risk curator, and that if it had, the crisis may have been averted.
There were also complaints about how the update only talks about data people already have, rather than providing solutions to the existing issues.
The total mapped exposure across DeFi from the Stream Finance collapse is estimated at $284-285 million in debt across seven networks, involving curators like Re7 Labs, MEV Capital, Varlamore, and TelosC.
The Stream Finance breakdown was the third major DeFi incident within a number of days, following a $128 million Balancer exploit on November 3 and a $1 million oracle manipulation on Moonwell.
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