# Stream Finance > Stream Finance is a DeFi protocol and DEX that launched on the Sonic blockchain and expanded to Avalanche. In October 2025, its algorithmic stablecoin, STRM, de... - Canonical URL: https://iq.wiki/wiki/stream-finance - Categories: Projects & Protocols - Tags: DEX, DeFi, Infrastructure - Created: 2025-11-04T18:01:53.398Z - Last updated: 2025-11-05T08:37:55.279Z - Source: IQ.wiki — the world's largest blockchain and crypto encyclopedia (https://iq.wiki) --- **Stream Finance** is a [decentralized finance](https://iq.wiki/wiki/defi) (DeFi) protocol that provides yield-generating products for crypto assets. The project has described itself as a "SuperApp" for DeFi, a "yield bearing, MEV recapturing" decentralized exchange (DEX), and a "recursive looping yield-focused" platform [\[1\]](#cite-id-IEzBsy6Inw) [\[2\]](#cite-id-d9zEHLkJp9) [\[3\]](#cite-id-kkxejlPwOd). It initially launched on the Sonic blockchain, a Layer 2 network, and later expanded its operations to the [Avalanche](https://iq.wiki/wiki/avalanche) blockchain [\[2\]](#cite-id-d9zEHLkJp9). The protocol gained significant user deposits before experiencing a severe crisis in late 2025 when its native stablecoin de-pegged, resulting in substantial losses for its users [\[3\]](#cite-id-kkxejlPwOd). ## History Stream Finance was established by a team of anonymous developers who operate under the pseudonyms 'Flow' and 'Ripple'. The project's official X (formerly Twitter) account was created in December 2022, with the protocol officially launching in February 2025 on the Sonic blockchain [\[2\]](#cite-id-d9zEHLkJp9). The platform experienced rapid initial growth, accumulating 110 million. The project announced its expansion plans early, stating on April 3, 2024, that it would deploy on the [Avalanche](https://iq.wiki/wiki/avalanche) blockchain. In June 2025, the team also announced future plans to deploy on the [Berachain](https://iq.wiki/wiki/berachain) network [\[2\]](#cite-id-d9zEHLkJp9). ## Core Technology Stream Finance's architecture is designed to generate high yields for users by deploying their deposited assets into complex financial strategies. The protocol's mechanism has been described as a "recursive looping" system, which suggests the use of leverage to amplify returns. This is supported by the team's distinction between user deposits (approximately 520 million) prior to its stablecoin crash [\[3\]](#cite-id-kkxejlPwOd). ### Yield Generation Strategies The protocol offers users a series of yield-generating vaults for assets including [USDC](https://iq.wiki/wiki/usdc), ETH (as [wETH](https://iq.wiki/wiki/weth-wrapped-eth)), BTC (as [wBTC](https://iq.wiki/wiki/wrapped-bitcoin-wbtc)), and [EURC](https://iq.wiki/wiki/eurc). According to its official website, these vaults employ "market neutral strategies" to generate returns. These strategies are a mix of: * Lending arbitrages * Incentive farming * Dynamically hedged high-frequency trading (HFT) * Market making On the [Avalanche](https://iq.wiki/wiki/avalanche) network, the protocol's vaults were specifically designed to execute basis and carry trades. This strategy involved arbitraging the difference between high funding rates on [Avalanche](https://iq.wiki/wiki/avalanche) and the lower cost of hedging the exposure, allowing users to earn yield without active management. The platform's design as a DEX also incorporates features to capture Maximal Extractable Value (MEV) to further enhance yields [\[2\]](#cite-id-d9zEHLkJp9). The protocol officially stated that potential risks for users included "Execution failure, smart contract risk, custody risk" [\[1\]](#cite-id-IEzBsy6Inw). ### Stablecoin Mechanism Stream Finance featured a native stablecoin designed to be pegged to the U.S. dollar. However, sources have identified the stablecoin by two different names. The project's social media referred to it as **STRM**, an algorithmic [stablecoin](https://iq.wiki/wiki/stablecoin) operating on a dual-token system. In this model, STRM was backed by a combination of over-collateralized crypto assets and the protocol's governance token, STREAM [\[2\]](#cite-id-d9zEHLkJp9). In contrast, reporting on the de-pegging event from *Unchained Crypto* identified the stablecoin as **Staked Stream USD (XUSD)**. The stability of this asset was linked to the performance and integrity of the platform's underlying leveraged yield strategies [\[3\]](#cite-id-kkxejlPwOd). ### Infrastructure The protocol is secured by [EigenLayer](https://iq.wiki/wiki/eigenlayer), utilizing the EthosStake Actively Validated Service (AVS). For cross-chain asset transfers, Stream Finance uses the Noble protocol, an interoperability platform also used by Circle for its stablecoins [\[2\]](#cite-id-d9zEHLkJp9). ## Stablecoin Crash (October–November 2025) In late October and early November 2025, Stream Finance's native stablecoin experienced a catastrophic [de-pegging](https://iq.wiki/wiki/currency-peg) event that led to the protocol's collapse and significant user losses. There are conflicting reports regarding the exact timeline of the event. ### Timeline of Events One set of reports, citing an *Unchained Crypto* article from October 29, 2025, states that the stablecoin, STRM, lost its peg on October 28, 2025 [\[2\]](#cite-id-d9zEHLkJp9). A separate report from *Unchained Crypto*, published on November 4, 2025, provides a different timeline. It states that the stablecoin, identified as XUSD, began to de-peg from its 100 million exploit on the automated market maker [Balancer](https://iq.wiki/wiki/balancer), raising concerns about potential market contagion. In response to the growing crisis, the Stream Finance team officially paused all deposits and withdrawals on its platform on Monday, November 4, 2025 [\[3\]](#cite-id-kkxejlPwOd). ### Financial Impact and Cause Both reports concur on the scale of the financial damage. The de-pegging event resulted in an estimated loss of **0.51** [\[2\]](#cite-id-d9zEHLkJp9) [\[3\]](#cite-id-kkxejlPwOd). The cause of the crash was attributed to the protocol's underlying mechanics and market pressure. One analysis described the trigger as "a series of large-scale redemptions and swaps against the stablecoin's liquidity pools," which created a feedback loop known as a "death spiral" for the algorithmic asset [\[2\]](#cite-id-d9zEHLkJp9). The incident highlighted the risks associated with complex, leveraged DeFi strategies, particularly when a protocol's reported metrics, such as TVL, differ from those tracked by standard industry aggregators [\[3\]](#cite-id-kkxejlPwOd). ### Protocol Response Following the de-peg, the Stream Finance team took several steps to address the situation: * **Suspension of Services:** All protocol operations, including deposits and withdrawals, were paused to prevent further losses and to begin an investigation [\[2\]](#cite-id-d9zEHLkJp9) [\[3\]](#cite-id-kkxejlPwOd). * **Legal Action:** The platform hired lawyers from the firm Perkins Coie to conduct a formal investigation into the incident and the associated losses [\[3\]](#cite-id-kkxejlPwOd). * **Compensation Plan:** The team announced a proposed compensation plan for affected users. The plan involved distributing the remaining assets in the protocol's treasury, supplemented by a portion of future protocol revenue [\[2\]](#cite-id-d9zEHLkJp9). * **Public Communication:** The team publicly acknowledged the suspension on X after users had already begun questioning the platform's status due to the visible de-pegging of the stablecoin. They also stated that a full post-mortem report would be released after their investigation was complete [\[2\]](#cite-id-d9zEHLkJp9) [\[3\]](#cite-id-kkxejlPwOd).