@tschombe2@Re7Labs I have also looked at this address, but USDX is not depegged. The problem is that why this address borrows or exchanges USDX to USDT every where recently and deposited the USDT Into Binance. Can anyone explain?
Statement on Stream Finance Insolvency and xUSD Exposure
Stream Finance has announced the insolvency of its protocol. This statement aims to address Re7 Labs' position with xUSD and provide clarity to our users.
TLDR, no exposure in mRe7YIELD or mRe7BTC and vault exposure is limited to select cases representing a very small percentage of Re7 Labs vault TVL. Cases explained below.
Stream Finance is a yield-aggregating platform that allocates capital across various on-chain and off-chain strategies to generate returns for its LPs. As part of its operations, Stream Finance issued the yield-bearing token xUSD, which we listed on select isolated Euler vaults on Plasma following the public mainnet launch in September.
As part of our initial asset listing due diligence, we identified potential risks with Stream’s xUSD including centralized counterparty risk. As a result, we created isolated vaults to allow users to lend directly to xUSD and keep risk segregated from other vaults. We have also made constant updates to manage exposure, both primary and secondary, across all markets that we curate. The result is that current primary and secondary exposure makes up less than 2% of total Re7 Labs vault TVL.
Current Exposure
The isolated xUSD/USDT0 cluster on Plasma currently holds approximately $14.65M in USDT0 deposits.
We are working directly with relevant teams to facilitate the further recovery process for depositors in this vault. In addition we have disabled further deposits and borrowing from this USDT0 vault. We will evaluate further parameter updates as the situation continues.
During our ongoing due diligence process, last week we proactively eliminated all exposure to xUSD through our curated Earn vault. Users who deposited into our curated Earn vault have zero exposure to xUSD and remain completely unaffected.
Secondary Exposure
Elixir protocol and assets sdeUSD and deUSD have exposure to xUSD as Elixir is a lender to Stream and Stream has substantial positions in Elixir assets.
We have been in constant contact with the Elixir team to reduce borrowing done with sdeUSD and deUSD across our vaults. As a result, the total exposure to sdeUSD and deUSD within vaults has been reduced substantially over the last few weeks.
Vaults where sdeUSD and deUSD are used as collateral.
- deUSD on Euler Avalanche: $2.68M
- sdeUSD on Euler Avalanche: $8.75M
- sdeUSD on Morpho Plume: $1m
- sdeUSD on Morpho Worldchain: $250k
Risk Management Framework
Our stringent due diligence process identified elevated risks associated with these assets from the outset, however due to significant user and network demand we made the decision to list them as collateral—but only with conservative parameters specifically designed to limit the impact of adverse events:
🔹Conservative collateral caps: We maintained restrictive exposure limits across all markets. Upon identifying the interaction between Stream and Elixir, we immediately implemented conservative caps on Elixir assets and began actively winding down exposure across all markets where Stream is not a borrower
🔹Limited platform exposure: We carefully controlled where and how these assets were listed. xUSD was listed exclusively on Plasma, where user demand was significant and the asset was being heavily promoted through incentive programs.
🔹Continuous monitoring: We actively adjusted parameters based on ongoing risk assessment
🔹Proactive reduction: We steadily decreased exposure as our monitoring continued, with particular attention to the Stream-Elixir relationship
These protective measures successfully contained the impact of Stream's insolvency to less than 2% of Re7 Labs vault TVL.
Actions and Next Steps
We are continuing to reduce deUSD & sdeUSD exposure:
- We are working with Elixir directly to enable users to repay borrowing.
- Reduced sdeUSD exposure on Plume from $6m to $1m through Elixir LP unwinding.
- Worked with Stream on repaying their full borrow on Morpho Worldchain, reducing exposure to sdeUSD from $7m to $250k.
- Further monitoring of Stream situation to facilitate as orderly a wind-down as possible. We will keep users updated with further communication as we receive more information.
Unaffected Products
Recent speculation about mRe7YIELD having exposure to xUSD, sdeUSD, or deUSD is false. mRe7YIELD and mRe7BTC have zero primary or secondary exposure to Stream, Elixir, Balancer or the October 10th market crash. October's exceptional returns reflect the strength of our advanced risk management framework and the thorough due diligence process integral to our mRe7YIELD and mRe7BTC strategies
Contact Us with Further Questions
For any further questions, please reach out on @Re7Labs.
Balancer Incident Update
1. Balancer V2 Vault has encountered a security breach, during which a hacker drained approximately $1 million worth of assets (USDX + sUSDX) from the USDX/sUSDX V2 pool.
⚠️ This liquidity loss will be fully covered by the Stables Labs team, and no user funds have been affected.
2. Immediately after the incident, we took the following precautionary measures:
- Temporarily limited cross-chain bridge flow rates to ensure the security of assets on other chains.
- Blacklisted the hacker's address and froze all associated assets.
- Collaborated with security teams and partner protocols to trace the movement of stolen funds.
3. Liquidity on PancakeSwap (BNB Chain) has been restored and confirmed to be safe.
All other integrated protocols on BNB Chain have also been verified as unaffected.
4. Liquidity on Arbitrum and Base chains will be gradually restored once safety is confirmed. A separate announcement will follow with the exact timelines.
User fund security remains our top priority.
We sincerely thank the community for your understanding and continued support. We will keep closely monitoring the situation and provide timely updates as we progress.