Balancer and Stream Finance Collapse

November 11, 2025

Welcome to Crypto Risk Review, your concise and clear resource for quickly understanding and navigating crypto and DeFi market risks. Each edition provides a snapshot of critical risk factors and actionable insights derived from Sentora's DeFi Risk platforms.

Gabriel Halm

TL;DR:

Stream Finance and Elixir Protocol collapses send shockwaves through DeFi Ecosystem
Balancer exploit drained $129M.
Liquidations on the rise again above $117M in the last 2 weeks post Stream/Elixir Collapse
Early depeg alerts: Sentora flagged Elixir tokens days before collapse.
Last week’s events have caused a scramble for safe debt, causing available stable liquidity to drop over 7%

Risk Pulse and Radar Highlights

Source: Risk Pulse

Depegging alerts for Elixir’s tokens started coming through Sentora’s risk pulse notification system days before full collapse of protocol

Source: Aave Risk Pulse

Despite having no direct exposure to Stream Finance (xUSD) and Elixir (deUSD) on Aave v3 Core instance nor exposure to the affected markets on Balancer, the protocol saw large liquidations due to the volatility in the market

Current Event Risks

Balancer Exploit

On Nov 3, Balancer V2 suffered a precision‑rounding exploit that deflated pool invariants and allowed attackers to withdraw above fair value. The incident drained liquidity from several LST/stable pools and affected forks before emergency pauses.

Exploit vector: Multi‑step swaps exploited rounding errors.
Losses: $116–$129M across Ethereum/L2s.
Impact: Reduced pool depth, wider spreads, LP exits.
Risk: Forks using same pool math remain exposed.
Fixes: Emergency pauses, rounding patch, new audits.
Monitor: BPT discounts, liquidity migration, fork updates.

StakeWise osETH impact: Some affected pools held osETH. StakeWise coordinated pauses and whitehat recoveries, enabling partial fund recovery. Residual losses are covered through treasury support and updated pool parameters.

Stream and Elixir Collapse

Stream Finance’s $93M off‑chain loss triggered xUSD’s depeg and withdrawal halt. Elixir followed by winding down deUSD due its exposure to Stream Finance and no longer being fully collateralized. Contagion spread to curator‑managed lending markets, causing broad liquidity stress.

Contagion: Euler v2, Morpho, Silo, and other lending protocols with xUSD/deUSD exposure.
Indicators: Utilization near 100%, rate spikes, tightened parameters.
Impact: Curator TVL fell ~$10.5B → $7.5B (~$3B loss).
Affected curators: TelosC, K3, Re7, MEV Capital, Varlamore, Gauntlet among others all face exposure due to collateral choices and parameter settings in curated/managed markets

Curators crowded into high‑yield protocols chasing returns, leading to heavy exposure to Stream and Elixir. Their leveraged synthetic‑dollar strategies and correlated collateral amplified losses and deepened system‑wide liquidity strain.

Stream Finance falls under the category of DeFi Strategy Vault Protocols that we identified as a ecosystem risk vector in a previous post. This is a DeFi category to keep an eye on as it could be Stream and Elixir are only the first victims of mismanagement in this protocol category.

Feature Dashboard: YEI Finance

Currently the largest protocol in DeFi, Yei Finance is one of the keystone protocols in the ecosystem for providing liquidity and leverage for both institutional and retail users. Monitoring risks in Yei Finance can often provide signals to general ecosystem risks that can impact strategies across DeFi.