Yearn analyzes Stream Finance collapse from circular leverage

Yearn published a thread breaking down the collapse of Stream Finance, which lost hundreds of millions to circular leverage. Depositors saw $520M TVL at 12-18% stablecoin APY in October 2025, but only $160M actually existed; DeFiLlama refused to count the loops and showed ~$200M. Stream held roughly 90% of Elixir's deUSD supply, which was itself backed by Stream's xUSD token.

Yearn notes the loop failed to unwind cleanly: Stream suspended redemptions, lending markets hit 100% utilization freezing withdrawals, and oracles hardcoded xUSD at $1 so liquidations never fired, creating bad debt. It also flags that multiple risk curators were exposed to the risky protocols, leaving users who trusted them holding the bag. The analysis was promoted via Yearn's official X account.