Tiger Research: Risk management essential to prevent another Stream Finance crisis

Asian Web3 research and consulting firm Tiger Research has analyzed the collapse of Stream Finance's xUSD and its contagion effect across the DeFi ecosystem in a new report. The firm noted that while Stream Finance claimed to use a market-neutral strategy for stable returns, its operations were opaque, lacking proof of reserves or a confirmed insurance fund. The crisis was triggered after CBB raised concerns that xUSD had borrowed $530 million, 4.1 times its on-chain collateral of just $170 million. A concurrent hack on Balancer then prompted investors to begin withdrawing funds, sparking a panic that spread throughout the DeFi market. The fallout impacted other projects, including MEV Capital, Elixir's deUSD, Compound, and Yei Finance. Tiger Research concluded that to prevent a similar crisis, the sector requires improved risk management, including objective risk assessments by independent evaluators and structural mechanisms that impose direct accountability on project operators.