🚨 IS BITCOIN DUMPING BECAUSE DEFI JUST HAD ITS NEXT TERRA LUNA MOMENT? Stream Finance, a “recursive looping” DeFi platform behind the xUSD stablecoin, just reported a $93M asset loss tied to an external fund manager. Withdrawals are frozen as the company hires Perkins Coie LLP to lead a full investigation. The fallout has been immediate. Their xUSD stablecoin plunged 76%, and total debt exposure across protocols like Euler, Silo, and Morpho now exceeds $285M, raising fears of a broader contagion. Analysts say the collapse exposed a looping scheme where Stream’s xUSD and Elixir’s deUSD minted off each other, compounding leverage and masking real collateral, aka a “DeFi perpetual motion machine.” The xUSD vault itself grew from $40M to nearly $400M in just months, while maintaining a flat 15% yield. This is behavior analysts say is impossible on-chain without off-chain smoothing or leverage. Just four days before the collapse, Stream touted its letters of engagement with auditing firms to verify over $400M in on-chain reserves and promised a transparency dashboard. What they promised as a $400M institutional-grade yield strategy may instead be DeFi’s next systemic failure, echoing Terra’s collapse. Once again, very little was learned in this space over the last four years. If you don’t know where the yield comes from, you are the yield.