Ethena’s synthetic dollar USDe has shrunk from about $14.7Bn to roughly $6.4Bn in just over two months after the October 10 crypto crash. That’s an $8.3Bn exit as traders unwind risk and move toward simpler, fiat-backed stablecoins. This all happened during the biggest liquidation event in crypto history, when more than $19 billion in positions vanished, and the market wiped out around $1.3Tn in value. What Is USDe, and Why Did So Much Money Leave? USDe is a “synthetic stablecoin,” which means it does n ...

DeFi Innovation & Market Position - Fluid is considered a top DeFi innovation, merging lending and DEX functionalities [1] - Fluid aims to challenge Uniswap for the leading DEX position in the crypto space, operating as a lending protocol [1] Tokenomics & Burn Rate - $FLUID has burned 0.5% of its total supply since October [1] Product Development - Fluid DEX v2 is launching soon with pools for volatile trading pairs [1] Risk Management & Stability - The collapse of xUSD and other hedge fund stablecoins validates the team's due diligence capabilities [1] Lindy Effect - Fluid's Lindy effect is growing as it continues to operate [1]

Group 1: Bitcoin Market Dynamics - Bitcoin price fell below the psychological threshold of $100,000, reaching a low of $99,075.89 before a brief recovery to $104,070, indicating a significant market panic [1] - The recent crash is attributed to a "death spiral" caused by market sentiment cooling and leveraged liquidations, with 76% of liquidations being long positions [3] - Long-term holders sold 405,000 Bitcoins worth over $4 billion in the past 30 days, contributing to downward pressure on prices [3] Group 2: U.S. Government Shutdown Impact - The U.S. government shutdown has entered its 36th day, causing significant disruptions in various sectors, including air travel, with thousands of flights delayed or canceled [5] - The Congressional Budget Office estimates that the shutdown could reduce the annualized GDP growth rate by 1-2 percentage points per week, potentially leading to a $14 billion economic loss in Q4 [6] - The political deadlock is rooted in sharp divisions over the Affordable Care Act, reflecting broader political polarization in the U.S. [6] Group 3: Federal Reserve and Economic Concerns - The Federal Reserve's recent interest rate cut of 25 basis points to a range of 3.75% has not alleviated market anxiety, with concerns about inflation persisting [8] - The independence of the Federal Reserve is under unprecedented pressure, with political interventions complicating monetary policy decisions [8] - A crisis in stablecoins has emerged, with significant liquidity risks highlighted by the collapse of xUSD, which could lead to a broader liquidity crisis in the cryptocurrency market [8] Group 4: Broader Market Reactions - The Nasdaq index fell by 2% in a single day, with significant losses in tech stocks like Nvidia, reflecting a broader downturn in risk assets [10] - Consumer confidence has dropped to its lowest level since June 2022, indicating a potential slowdown in consumer spending [10] - Analysts predict that if Bitcoin fails to hold above $100,000, it may target a low of $74,000, highlighting the extreme uncertainty in the market [10]

Core Insights - Elixir has decided to wind down its deUSD synthetic dollar stablecoin following a significant loss disclosed by Stream Finance, which has caused ripple effects across the DeFi ecosystem [1][7]. Incident Overview - Stream Finance reported a loss of approximately $93 million in assets managed by an external fund manager, leading to the suspension of all withdrawals and deposits [2][3]. - Elixir had parked 65% of deUSD's collateral with Stream, which lost $93 million using its own stablecoin (xUSD) as collateral, resulting in a 77% drop in xUSD and effectively nullifying deUSD's backing [3][6]. Market Impact - The value of deUSD collapsed by over 97% within 24 hours, trading around $0.025 [5]. - Panic selling ensued, with over $30 million dumped on-chain as holders rushed to exit [3]. Redemption Process - Elixir announced that all remaining holders of deUSD and sdeUSD would be able to redeem their assets for a dollar, and a claim page was launched for users to redeem their assets in USDC [4][6]. - The protocol has taken a snapshot of all remaining holder balances and expects all claims to be honored on a 1:1 basis [6]. Broader Implications - The incident underscores the interconnectedness of DeFi systems, highlighting how losses in one protocol can significantly impact others, and raises ongoing discussions about collateral design, transparency, and risk management in decentralized finance [7].

Market Trends - Vault products, similar to Stream xUSD, are expected to continue attracting users due to the complexity of DeFi and retail demand for higher passive yield [1] - DeFi faces opacity issues, hindering real-time tracking of funds [1] Solutions & Alternatives - Transparent products like Yearn, Beefy, and Fluid 'Lite' vaults offer solutions to the opacity problem [1] - Lido is entering the Vault category with its own strategies, providing another transparent option [1] - While yields may be lower, these transparent options ensure users know the source and location of their funds [2]

Group 1: Market Overview - The cryptocurrency market experienced a significant price drop on November 5, with Bitcoin falling below $100,000, reaching a low of $99,113.39, a decrease of 20.5% from its one-month high of $124,658.54 [1] - Ethereum also saw a decline, dropping below $3,100 and falling over 14% [1] - A total of 479,000 individuals experienced liquidation, with a total liquidation amount of $2.055 billion (approximately 146.37 billion RMB), predominantly from long positions [1] - As of November 6, the 24-hour liquidation count was 160,200 individuals, amounting to $316 million, with long positions making up 60% [1] Group 2: Stablecoin Issues - The decentralized stablecoin XUSD from Stream Finance faced a significant de-pegging crisis, dropping from its $1 peg to around $0.26, a deviation of over 77% [2] - An external fund manager reported a loss of approximately $93 million related to Stream's funds [2] - XUSD operates as a derivative stablecoin, which is typically over-collateralized with risk assets, unlike fiat-backed stablecoins like USDC [2][3] - The core issue with derivative stablecoins lies in their yield sources, which are often tied to the issuer's management strategies [2] Group 3: Market Dynamics and Future Outlook - The recent downturn in cryptocurrency prices is attributed to multiple factors, including concerns over AI and technology valuation bubbles, leading to a withdrawal of risk capital [6] - The market's overall liquidity has tightened since October 11, with structural vulnerabilities and significant volatility effects observed [7] - The medium to long-term market trajectory will depend on macro monetary policy directions and institutional capital inflows [7]

Core Insights - Stream Finance suspended all withdrawals and deposits on November 3 after an external fund manager reported a loss of approximately $93 million in company assets [1][2] - The company is in the process of withdrawing all liquid assets but has not provided a timeline for resuming operations or identifying the responsible fund manager [2] Growth and Yield Concerns - Stream's xUSD vault experienced rapid growth from $40 million to nearly $400 million, maintaining a flat 15% yield, which raises suspicions about the sustainability of returns [3] - Onchain yields typically decrease with more depositors, suggesting that returns may have been artificially set or averaged from offchain strategies [3] Transparency and Risk - Stream Finance lacks a comprehensive Proof of Reserve or transparency dashboard, relying on a Debank bundle for onchain positions [4] - Following the announcement, xUSD depegged by 25% from its target price before partially recovering [4] Contagion Risks in DeFi - Approximately $284.96 million in outstanding loans are secured by Stream's xUSD, xBTC, and xETH collateral across various DeFi lending platforms [5] - Users deposit Bitcoin, Ethereum, and dollars to mint derivative tokens used as collateral on other platforms [5] Specific Exposure Cases - Elixir Network's deUSD stablecoin has $68 million in USDC lent to Stream against xUSD collateral, representing 65% of deUSD's total backing [6] - Elixir claims full redemption rights but cannot process payouts until creditor priority is determined, putting it at risk if Stream cannot recover funds [6] Major Exposures - The largest exposed curator is TelosC with $123.64 million in loans secured by Stream assets, followed by Elixir at $68 million and MEV Capital at $25.42 million [7] - MEV Capital's xUSD market on Arbitrum has fallen below liquidation thresholds, with borrow rates reaching 88% at 100% utilization [7]

Market Overview - The crypto market is experiencing a risk-off session, with Bitcoin (BTC) down 3.5% in the past 24 hours, nearing October lows around $103,600, potentially marking its lowest price since June [1] - The CoinDesk 20 Index has decreased by 5%, with major altcoins like ether (ETH) and solana (SOL) also reaching their lowest levels since August [1] Contributing Factors - Hawkish comments from Fed Chair Jerome Powell, a strengthening dollar index, and persistent selling from long-time wallets are blamed for the market downturn [2] - Market maker Wintermute noted that while global liquidity is expanding, capital is not flowing into crypto, with ETF inflows stalling and only stablecoins showing growth [2] - The bearish sentiment may also be linked to the October 17 flash crash, where several arbitrage bets lost money, leading firms to potentially liquidate long spot positions, adding downward pressure on prices [2] Specific Incidents - Stream Finance's stablecoin, xUSD, collapsed by 80% to 30 cents, resulting in a reported $93 million loss due to issues with an external fund manager [3] - The investigation into the xUSD collapse has raised concerns within the crypto community about broader market implications [3] - Lenders of xUSD are reportedly earning over 500% daily interest, indicating potential trouble for the protocol's treasury [3] Market Trends - Despite the overall market decline, some privacy coins like Zcash, Decred, and DASH have surged by as much as 200% in just 24 hours, suggesting traders are seeking refuge in these assets [4] Traditional Market Insights - In traditional markets, a rise in credit default swaps tied to Oracle reflects investor concerns over the company's significant AI-related spending [5] - The dollar index has reached 100 for the first time in months, complicating the outlook for Bitcoin bulls [5] - Gold prices remain steady around $4,000 per ounce [5]

Stream Finance's xUSD Concerns - Concerns have arisen regarding Stream Finance's xUSD within the last 24 hours [1] - Elixir possesses full redemption rights at $1 with Stream for its lending position [1] - Elixir is the sole creditor with these 1-1 rights [1] Elixir's Position and Actions - deUSD remains fully backed [1] - Elixir is initiating the process of unwinding its position [1]