Stream Finance's post-collapse aftermath: $100 million frozen, DeFi systemic risks reignited.

2025-11-24 08:31:12

How bad is the situation?

The collapse of Stream Finance continues to unfold. A large holder revealed to the media that over $107 million in funds has been frozen due to this crash, including:

Euler Lending Protocol: $82.8 million USDT (across 3 wallet addresses)
Silo Lending Agreement: 233.3 BTC (approximately 24.5 million USD)

What's even more heartbreaking is that this money can't be withdrawn at all right now.

Why can't it be withdrawn?

This is a classic case of the design flaw in DeFi: Stream Finance's withdrawal mechanism relies on the influx of new funds to operate. Now that the deposit function has been closed, no new money is coming in, and old money cannot go out. Users are like being trapped in a debt cycle that they can't escape.

Bigger troubles are yet to come.

According to independent DeFi analyst YieldsAndMore's calculations, the Stream Finance project has created a $285 million chain debt risk for the entire DeFi ecosystem:

TelosC: $123.6 million (most affected)
Elixir: 68 million USD
MEV Capital: $25.4 million

Among them, Elixir lent $68 million USDC to Stream, which accounts for 65% of the total deUSD reserves — once Stream completely collapses, the domino effect will continue.

Victims are still being cut.

The matter is not over yet. Many frozen investors are organizing to try to leverage various means (including using MEV bots to front-run trades) to pry open the limited liquidity of the protocol. Even worse, some scammers are deceiving investors into giving up their deposit certificates under the guise of “technical support,” leading to ongoing secondary harm.

What does this reflect?

The collapse of Stream Finance is like an X-ray vision:

1. Hidden Risks of Recursive Leverage — Projects stacking protocols on top of each other, risks are hidden layer by layer.

2. Cross-Protocol Contagion —— When one project collapses, the entire ecosystem is shaken.

3. Risk Disclosure is Essentially a Formality —— Users and creditors often only discover the real risks through third-party analysis afterwards.

4. Managing Vacuum —— Decentralized protocols like Euler, Morpho, and Silo cannot intervene directly, they can only watch investors save themselves.

Current Situation

Victims can only rely on legal teams to file lawsuits (success rate unknown), and there has been no official communication since November 4. The timeline for fund unfreezing is completely unknown. This over 100 million dollars could potentially be a “bad debt” in the short term.

Revelation

High returns in DeFi have always come with high risks. Recursive lending, cross-protocol combinations, liquidity mining… It seems like every bit of yield can be squeezed out, but in reality, it's like playing Russian roulette. The next crash could be just around the corner.

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