Core Insights - Stream Finance's external fund manager lost approximately $93 million in user assets, leading to a 77% crash in the price of its stablecoin, Staked Stream USD (xUSD) [1][2] - The protocol has suspended all withdrawals and deposits while engaging a law firm to investigate the incident [1][2] - The loss has exposed vulnerabilities in the interconnected lending ecosystem of DeFi [1] Financial Impact - The price of xUSD plummeted to approximately $0.50 shortly after the loss, and as of the latest data, it is trading at $0.26, marking a 77% drop in 24 hours [2] - Direct debt exposure across multiple lending protocols is estimated at nearly $285 million, with significant exposure from various curators [3] Market Dynamics - The incident raises concerns about the settlement process between xUSD/xBTC/xETH holders and lenders, as these tokens were used as collateral in DeFi lending markets [4] - Indirect exposure includes stablecoins like Elixir's deUSD, which lent $68 million USDC to Stream, representing 65% of its backing [4] Risk Factors - The collapse is attributed to a leverage ratio exceeding 4x, with borrowing reaching $530 million against supporting assets of only $170 million [5] - The use of rehypothecation chains, where collateral is used multiple times across different platforms, has created a cascading effect in the market [5]