Berachain performed a quick hard fork to protect its users, while Sonic Labs froze the attackers’ wallets to prevent further losses. However, the damage had already spread throughout the system.
xUSD has been depegged as Stream Finance’s popular high-yield token has lost stability. This event will uncover deeper questions about leverage, transparency, and risk management in DeFi’s complex infrastructure.
How the balancer exploit caused a chain reaction
Hackers exploited vulnerabilities in Balancer v2 across multiple blockchain networks. It remained unclear for hours which liquidity pools had been compromised and which DeFi platforms were directly at risk. The uncertainty led to panic withdrawals as investors scrambled to protect their money.
1/TL;DR
After a few hours of multichain @balancer This exploit causes widespread uncertainty across DeFi, @berachain Execute an emergency hard fork, @SonicLabs The attacker’s wallet was frozen.
Shortly after, Stream Finance’s xUSD began depegging well below its target range. pic.twitter.com/FG0T9SgGKj
— Omar Goldberg (@omeragoldberg) November 3, 2025
Stream Finance, which operates as an on-chain capital allocation company that manages users’ deposits through high-yield strategies, is also one of the companies affected. The protocol lacked a fully transparent dashboard and robust proof-of-reserve system, and struggled to reassure users. As fears spread, xUSD, a tokenized dollar product designed to stay around $1.26, fell to $1.15 before recovering slightly to $1.20.
3/ Background of what happened
The Balancer v2 exploit spread across multiple chains, and for a long time it was unclear which pools were affected by which networks, or which integration protocols were directly compromised.
— Omar Goldberg (@omeragoldberg) November 3, 2025
This type of “reflexive stress event”, where the uncertainty itself causes rapid withdrawals and price declines, mirrors the behavior seen in traditional runs. Stream Finance’s leverage structure compounded the stress as its assets were used as collateral across multiple lending protocols on Arbitrum, Plasma, and other networks.
Some markets avoided instant liquidation because they relied on fixed “fundamental value” feeds rather than live market prices. While this design helps prevent flash liquidations, it also obscures real-time risks and can delay necessary remediation.
6/ Stream is an on-chain capital allocator that uses users’ funds to execute high-reward, high-risk strategies.
Its portfolio construction has had a meaningful impact, making the system more resilient under stress, and in recent days the protocol has… pic.twitter.com/mB3Ce9j2Xi
— Omar Goldberg (@omeragoldberg) November 3, 2025
The big picture: DeFi transparency and trust
This episode highlights a recurring problem in decentralized finance: the tension between innovation and transparency. Many DeFi projects, in pursuit of higher yields, have structural risks that are not fully visible to users. Without comprehensive proof-of-reserve audits and transparent portfolio reporting, investors are left guessing about how safe their assets really are.
According to DefiLlama, the total value locked (TVL) across DeFi decreased by 4% within 24 hours of the Balancer exploit, highlighting how quickly fear can spread within systems built on interconnected protocols. Recent sell-offs, from the Terra stablecoin in 2022 to the Curve hack in July 2024, show that a liquidity crisis can snowball as confidence shakes.
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