Withdraw your money from Morpho and Euler! It was the unfortunate clarion call when Bitcoin, Ethereum and some of the best cryptos to buy plunged dangerously towards crucial support levels.
It’s a worrying message that raises more questions than answers. How is this done? Morpho and Euler are nothing more than top-notch DeFi protocols cumulatively managing over $1 billion in assets, at least before the Balancer disaster on November 3.
Big money or not, on
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If you are an avid DeFi user, providing liquidity, borrowing and lending, you have every reason to be cautious.
According to DefiLlama, the total value locked (TVL) across all DeFi protocols has decreased by almost double digits in the last 24 hours. At the start of October, DeFi TVL stood at over $170 billion, less than a month later over $40 billion was withdrawn across all protocols, particularly Ethereum and its layer 2s, including Base and Optimism.
Oddly enough, even the most stable of them all, Aave, which is also the largest by TVL, lost over -27% of its deposits in the last month alone. The same can be seen in Lido, whose TVL decreased by the same margin over the past month. On Ethena, whose algorithmic stablecoin deindexed on October 10, its TVL is down 38% in four weeks.
Interestingly, on Morpho, less than -10% of assets were withdrawn in the last month.
(Source: DéfiLlama)
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Curious, right?
This simply doesn’t make sense because Morpho and Euler, whose TVL is also down over -47% in a month, are two DeFi protocols facing serious liquidity issues.
An analyst at
Apparently, the two took USDC users’ deposits and distributed them to “insolvent” protocols like Stream Finance, which then “operate loophole scam stables” like xUSD.
It turns out that xUSD is probably dead and at risk of crashing with other DeFi protocols.
When Balancer was hacked, it took only a few hours before xUSD unanchored, dropping from $1.26 to $0.24. But that’s not the only thing that happened that day.
Stream Finance, the issuer of xUSD, disclosed a separate $93 million loss related to an “external fund manager error” that led to the freezing of $160 million in user deposits. As a result, they had to suspend all withdrawals and deposits.
