Sonic price

Original author: Omer Goldberg, Chaos Labs Original compilation: TechFlow summary Hours after a breach attack on the multi-chain platform @Balancer sparked widespread uncertainty in the DeFi space, @berachain urgently executed a hard fork, @SonicLabs froze the attacker's wallet. Subsequently, Stream Finance's xUSD stablecoin price significantly deviated from its target range, exhibiting a noticeable de-peg phenomenon. Long-term problems have resurfaced The long-running controversy surrounding leverage, oracle building, and proof-of-reserves (PoR) transparency is once again in focus. This is exactly the case of the typical "reflexive stress event" we outlined in our "DeFi's Black Box/Vault" article last Friday. What happened? /background The Balancer v2 vulnerability has been exposed on multiple chains, and it is unclear which pools are affected and which networks or integration protocols are directly exposed to risk for a considerable period of time. Capital panic in the information vacuum In the information vacuum, the reaction of capital is as always that depositors rush to withdraw liquidity from anywhere they believe may be directly or indirectly affected, including Stream Finance. Controversy over lack of transparency Stream Finance does not currently maintain a comprehensive transparency dashboard or Proof of Reserve; However, it provides a link to the Debank Bundle that displays its on-chain positions. However, these simple disclosures failed to definitively address risk exposure after the breach broke: the price of xUSD (Stream's stacked yield USD product) fell from a target price of $1.26 to $1.15 and is now back to $1.20, while user reports that withdrawals have been suspended. Risks & Disputes of Stream Finance Stream is an on-chain capital distribution platform that uses user funds to run high-return, high-risk investment strategies. Its portfolio is built with significant leverage, making the system more resilient under pressure. However, the protocol has recently become the focus of public attention due to the controversy over the recursive cycle/minting mechanism. While the current situation does not directly indicate a liquidity crisis, it does reveal the high sensitivity of the market. When negative news emerges and confidence is questioned, the transition from "probably fine" to "redeem immediately" is often very rapid. xUSD is used as collateral in Curated Markets, including Euler, Morpho, and Silo, which cover ecosystems such as Plasma, Arbitrum, and Plume. The protocol itself has significant risk exposure in these markets, with the largest being $84 million USDT loaned as xUSD collateral on Plasma. Mortgage mechanism and risk buffer When the market price of xUSD falls below its book value, the position is not immediately liquidated because many markets do not peg the value of collateral to spot AMM (automated market maker) prices, but instead rely on hard-coded or "base value" feeds that track reported asset backing rather than current secondary market prices. In calm times, this design can mitigate tail risk liquidation due to short-term volatility, especially in stable products. This is one of the reasons why DeFi protocols outperformed centralized platforms during the liquidation wave on October 10. However, this design can also quickly turn price discovery into trust discovery: selecting a base (or hardcoded) oracle requires adequate due diligence, including the authenticity, stability, and risk profile of the asset's backing. In short, this mechanism is only applicable if you have a comprehensive Proof of Reserve and can complete the redemption within a reasonable time. Otherwise, the risk is that the lender or depositor may end up with the consequences of bad debt. Stress testing on Arbitrum Taking Arbitrum as an example, the current market price of MEV Capital Curated xUSD Morpho Market is already below LLTV (Minimum Loan-to-Value Ratio). If xUSD's peg price fails to recover, the market could deteriorate further with 100% utilization and borrowing rates soaring to 88%. We are not against basic oracles, on the contrary, they are decisive in preventing unfair liquidations caused by short-term fluctuations. Similarly, we are not opposed to tokenization or even centralized yield-bearing assets. But we advocate for basic transparency and modern, systematic, and specialized risk management when deploying money markets around these assets. Curated markets can be engines of responsible growth, but they cannot be reduced to a race to sacrifice safety and rationality in pursuit of high returns. If you are building a complex structure in the form of dominoes, you should not be surprised that it will collapse when the first gust of wind blows. As the industry becomes more specialized and some revenue products are structured (but can be more obscure for end users), risk stakeholders must raise the bar. While we hope to eventually resolve the issue properly for affected users, this should be a wake-up call for the entire industry. Original link

By Omer Goldberg Compiled by: Deep Tide TechFlow summary Hours after a breach attack on the multi-chain platform @Balancer sparked widespread uncertainty in the DeFi space, @berachain urgently executed a hard fork, @SonicLabs froze the attacker's wallet. Subsequently, Stream Finance's xUSD stablecoin price significantly deviated from its target range, exhibiting a noticeable de-peg phenomenon. Long-term problems have resurfaced The long-running controversy surrounding leverage, oracle building, and proof-of-reserves (PoR) transparency is once again in focus. This is exactly the case of the classic "reflexive stress event" we outlined in our "DeFi's Black Box/Treasury" article last Friday. What happened? /background The Balancer v2 vulnerability has been exposed on multiple chains, and it is unclear which pools are affected and which networks or integration protocols are directly exposed to risk for a considerable period of time. Capital panic in the information vacuum In the information vacuum, the reaction of capital is as always that depositors rush to withdraw liquidity from anywhere they believe may be directly or indirectly affected, including Stream Finance. Controversy over lack of transparency Stream Finance does not currently maintain a comprehensive transparency dashboard or Proof of Reserve; However, it provides a link to the Debank Bundle that displays its on-chain positions. However, these simple disclosures failed to definitively address risk exposure after the breach broke: the price of xUSD (Stream's stacked yield USD product) fell from a target price of $1.26 to $1.15 and is now back to $1.20, while user reports that withdrawals have been suspended. Risks & Disputes of Stream Finance Stream is an on-chain capital distribution platform that uses user funds to run high-return, high-risk investment strategies. Its portfolio is built with significant leverage, making the system more resilient under pressure. However, the protocol has recently become the focus of public attention due to the controversy over the recursive cycle/minting mechanism. While the current situation does not directly indicate a liquidity crisis, it does reveal the high sensitivity of the market. When negative news emerges and confidence is questioned, the transition from "probably okay" to "redeem immediately" is often very rapid. xUSD is used as collateral in Curated Markets, including Euler, Morpho, and Silo, which cover ecosystems such as Plasma, Arbitrum, and Plume. The protocol itself has significant risk exposure in these markets, with the largest being $84 million USDT loaned as xUSD collateral on Plasma. Mortgage mechanism and risk buffer When the market price of xUSD falls below its book value, the underlying position is not immediately liquidated because many markets do not peg the value of collateral to spot AMM (automated market maker) prices, but instead rely on hard-coded or "underlying value" feeds that track reported asset backing rather than current secondary market prices. In calm times, this design can mitigate tail risk liquidation due to short-term volatility, especially in stable products. This is one of the reasons why DeFi protocols outperformed centralized platforms during the liquidation wave on October 10. However, this design can also quickly turn price discovery into trust discovery: selecting a base (or hardcoded) oracle requires adequate due diligence, including the authenticity, stability, and risk profile of the asset's backing. In short, this mechanism is only applicable if you have a comprehensive Proof of Reserve and can complete the redemption within a reasonable time. Otherwise, the risk is that the lender or depositor may end up with the consequences of bad debt. Stress testing on Arbitrum Taking Arbitrum as an example, the current market price of MEV Capital Curated xUSD Morpho Market is already below LLTV (Minimum Loan-to-Value Ratio). If xUSD's peg price fails to recover, the market could deteriorate further with 100% utilization and borrowing rates soaring to 88%. We are not against basic oracles, on the contrary, they are decisive in preventing unfair liquidations caused by short-term fluctuations. Similarly, we are not opposed to tokenization or even centralized yield-bearing assets. But we advocate for basic transparency and modern, systematic, and specialized risk management when deploying money markets around these assets. Curated markets can be engines of responsible growth, but they cannot be reduced to a race to sacrifice safety and rationality in pursuit of high returns. If a complex structure is built in a "domino" way, then when the first gust of wind blows, it should not be surprised that it collapses. As the industry becomes more specialized and some revenue products are structured (but can be more obscure for end users), risk stakeholders must raise the bar. While we hope to eventually resolve the issue properly for affected users, this should be a wake-up call for the entire industry.