Suilend pauses deposits and withdrawals specifically in its Elixir Isolated Market in response to a major loss reported by Stream Finance

DeFi lending protocol Suilend has taken precautionary measures following a major loss reported by Stream Finance, which caused ripple effects in the Sui ecosystem. Among the impacted was Elixir, a protocol linked to xUSD, Stream Finance’s dollar-pegged stablecoin-like asset. Suilend specifically addressed the issue, pausing deposits and withdrawals in the Elixir Isolated Market and demanding loan repayments. The team assured that “all other Suilend markets are unaffected and remain safe.”

Stream Finance disclosed the loss on its platform due to actions by an external fund manager. The total loss amounted to approximately $93 million, as reported earlier. While there was no evidence of a hack or external malicious attack, Stream's community suspects that customer deposits were used for risky investments, indicating it was an internal issue. To address this, Stream has engaged Keith Miller and Joseph Cutler of law firm Perkins Coie LLP to investigate and retrieve liquid assets. Stream has stated: “Until we fully assess the scope and causes, all withdrawals and deposits will be temporarily suspended.”

Stream Finance emphasized its commitment to transparency and corporate governance by involving Perkins Coie LLP. In a follow-up, Elixir claimed it retained “full redemption rights at $1 with Stream for its lending position.” They also stated that deUSD remains fully backed. Elixir has begun unwinding its lending position and assured stakeholders that it is actively addressing the crisis.

The DeFi industry has faced severe losses recently. For instance, Stream Finance's loss coincided with an exploit targeting Balancer, a yield-focused DeFi protocol, which lost over $100 million across multiple chains. This incident is one of the biggest DeFi hacks this year. Additionally, smaller exploits, like the $5.5 million theft from Garden Finance Bridge, highlight persistent vulnerabilities in the sector, causing cumulative damages to mount.

A recent Peckshield report revealed that 20 major DeFi platforms were exploited in September alone, accounting for $127 million in losses, a 22% drop from August’s $163 million. Total DeFi-related losses for 2023 have exceeded $3 billion, with notable victims such as Bunni DEX, which shut down after losing $8 million to hackers, unable to afford new security audits. These continuous losses underscore the urgent need for stronger security measures in the DeFi ecosystem.