Flash-Crash in 8 Minutes – the xUSD Story
On 4 Nov 2025, Stream Finance’s “interest-bearing stablecoin” xUSD collapsed from US$1.00 to US$0.12, wiping out 88 % of its market-cap in one afternoon.

• Trigger: A 4× leveraged delta-neutral book built on opaque off-chain positions lost US$93 m during the 11 Oct crypto rout.

• After-shock: Within seven days > US$1 bn fled every “yield-bearing stablecoin” tracked by StableWatch—an exodus equal to a mid-size city-bank run.

Mirror of 2008 – Packaging Risk as Safety
Stream marketed xUSD as “USD-pegged, auto-compounding, low-risk”.
Reality check on-chain:

1. Only 30 % of the US$500 m TVL was verifiable; the rest sat in “Schrödinger custody”.

2. Real leverage > 4×: US$170 m equity, US$530 m borrowed across DeFi loops.

3. Strategy: high-frequency perp–spot arbitrage—essentially a hedge-fund share, not cash.

Cyvers CEO Deddy Lavid: “Code was fine; humans were the attack vector.”

Curators – the Domino Couriers
Morpho/Euler “Curators” (on-chain fund managers) chased double-digit yields by stuffing vaults with xUSD:

• TelosC exposure: US$123 m

• K3 Capital lost US$2 m after Elixir (deUSD) secretly rotated US$68 m into Stream; now preparing U.S. litigation.
  When gate-keepers become yield-chasers, the fortress falls from inside.

Same Script, Different Decade

• 2022: 20 % “risk-free” in UST → US$40 b hole.

• 2008: sub-prime CDOs rated AAA → global margin-call.
  Today > 50 yield-stablecoins still sit on > US$8 b TVL, most replicating leveraged basis trades, gamma shorts or repo ladders—dressed as “stable”.

Take-away
A 15 % coupon is not a feature; it’s a disclosure.
If it needs a super-normal yield to seduce you, it was never a stablecoin—just a hedge-fund ticket with a misleading ticker.

Flash-Crash in 8 Minutes – the xUSD Story
On 4 Nov 2025, Stream Finance’s “interest-bearing stablecoin” xUSD collapsed from US$1.00 to US$0.12, wiping out 88 % of its market-cap in one afternoon.

• Trigger: A 4× leveraged delta-neutral book built on opaque off-chain positions lost US$93 m during the 11 Oct crypto rout.

• After-shock: Within seven days > US$1 bn fled every “yield-bearing stablecoin” tracked by StableWatch—an exodus equal to a mid-size city-bank run.

Mirror of 2008 – Packaging Risk as Safety
Stream marketed xUSD as “USD-pegged, auto-compounding, low-risk”.
Reality check on-chain:

1. Only 30 % of the US$500 m TVL was verifiable; the rest sat in “Schrödinger custody”.

2. Real leverage > 4×: US$170 m equity, US$530 m borrowed across DeFi loops.

3. Strategy: high-frequency perp–spot arbitrage—essentially a hedge-fund share, not cash.

Cyvers CEO Deddy Lavid: “Code was fine; humans were the attack vector.”

Curators – the Domino Couriers
Morpho/Euler “Curators” (on-chain fund managers) chased double-digit yields by stuffing vaults with xUSD:

• TelosC exposure: US$123 m

• K3 Capital lost US$2 m after Elixir (deUSD) secretly rotated US$68 m into Stream; now preparing U.S. litigation.
  When gate-keepers become yield-chasers, the fortress falls from inside.

Same Script, Different Decade

• 2022: 20 % “risk-free” in UST → US$40 b hole.

• 2008: sub-prime CDOs rated AAA → global margin-call.
  Today > 50 yield-stablecoins still sit on > US$8 b TVL, most replicating leveraged basis trades, gamma shorts or repo ladders—dressed as “stable”.

Take-away
A 15 % coupon is not a feature; it’s a disclosure.
If it needs a super-normal yield to seduce you, it was never a stablecoin—just a hedge-fund ticket with a misleading ticker.