Re7 Labs Reports Impact From Stablecoin Protocol Failures, Total Losses Exceed $27M
In Brief
Re7 Labs reported exposure to the recent failures of several stablecoin projects and has taken steps to manage risks, mitigate losses, and maintain transparency.
Decentralised finance (DeFi) research and risk management division of hedge fund Re7 Capital, Re7 Labs issued a report noting its exposure to the recent failures of several stablecoin projects, including Stream, Elixir, and Stable Labs. The statement indicated that the organisation is actively working to resolve and minimise complications affecting the xUSD Euler Markets, deUSD and sdeUSD markets on the Plume network, as well as the sUSDX and USDX markets on BSC.
Re7 Labs provided a transparent overview of recent developments involving stablecoin projects that affected its operations.
According to the report, in early October, the xUSD token from Stream was integrated into the Labs Earn vault on Plasma. Following fast growth in deposits, Re7 Labs’ review revealed that Stream had borrowed USDT0 from the vault while using its own xUSD token as collateral. After confirming with Stream’s leadership that the position was stable, Re7 Labs monitored the situation. Later that month, as borrowing rates rose sharply, Stream partially repaid its obligations, including $7 million USDC on Worldchain. To limit further exposure, Re7 Labs withdrew funds from the xUSD market and restricted new deposits by setting supply caps to zero.
Elixir contacted Re7 Labs in late October to request an allocation of approximately $6–7 million from the USDT0 vault on Plasma. After the funds were borrowed, utilisation levels across deUSD and sdeUSD markets reached full capacity, prompting Re7 Labs to request repayment. Further analysis revealed links between Elixir’s borrowing activity and Stream, leading Re7 Labs to reduce exposure and reallocate funds away from associated markets. By November 6, all positions involving deUSD and sdeUSD were fully repaid, removing any remaining exposure.
In early November, Re7 Labs identified suspicious movements connected to Stable Labs, whose accounts were transferring sUSDX and USDX holdings to exchange platforms. Despite multiple requests for clarification and repayment, Stable Labs did not respond adequately. Re7 Labs implemented protective actions, including reducing supply caps, adjusting risk parameters, and enabling partial liquidations, though limited liquidity constrained the process. Coordination with Lista DAO later prevented several million dollars in potential bad debt. Re7 Labs then demanded that Stable Labs add liquidity to assist users in unwinding positions, but no response was received.
Re7 Labs Reaffirms Commitment To Transparency And Strategic Action
Throughout the ongoing situation, Re7 Labs has maintained consistent communication with its contributors, external collaborators, and legal advisors to support efforts aimed at addressing and resolving the issues at hand. The organisation is obtaining comprehensive legal guidance to ensure that every aspect of the matter is carefully evaluated and that a suitable legal and strategic course of action is developed.
Although Re7 Labs’ role as a curator imposes certain operational boundaries, the organisation continues to actively pursue all viable avenues to mitigate risks and identify effective resolutions in coordination with partners and the broader community. Re7 Labs upholds its commitment to transparency, due diligence, and operational integrity, remaining engaged with all relevant stakeholders and intending to provide regular updates as additional information and progress emerge.
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About The Author
Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
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Alisa, a dedicated journalist at the MPost, specializes in cryptocurrency, zero-knowledge proofs, investments, and the expansive realm of Web3. With a keen eye for emerging trends and technologies, she delivers comprehensive coverage to inform and engage readers in the ever-evolving landscape of digital finance.
