Stream’s xUSD Controversy: $170M On-Chain Backing vs $530M Borrowed at 4.1x Leverage, Clarified as a Tokenized Market-Neutral Fund, Not a Stablecoin

Market observers cite KOL CBB0FE warning about xUSD from Stream: on-chain collateral sits at $170 million vs. about $530 million borrowed across lending protocols, implying roughly 4.1x leverage. The note flags illiquid positions and labels the setup as high-risk leverage, cautioning against Morpho and Euler vaults.

Stream‘s founder counters that the project is adding third-party attestors, with xUSD described as fully collateralized and overcollateralized, backed by an insurance fund. Assets are spread across CEXs and DEXs, not yet tracked by Debank, and transparency upgrades are planned.

Importantly, the team clarifies that xUSD was never designed as a stablecoin. It is presented as a tokenized market-neutral fund enabling retail investors to access real yields once reserved for hedge funds and quant institutions.

The debate underscores the need for robust disclosures and independent attestations in tokenized crypto products. Investors should monitor upcoming transparency updates and risk controls before engaging with xUSD or related vaults.

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