On November 5th, the DeFi research and risk management company Gauntlet put forward a proposal on the Ethereum lending protocol Compound forum. The proposal was to implement a temporary emergency pause on the following standalone borrowing markets in Compound v3, namely: USDC on Ethereum, USDS on Ethereum, and USDT on Ethereum. Gauntlet stated that a liquidity crisis was noticed in Elixir’s deUSD and sdeUSD, which are both listed as collateral in Ethereum USDC, USDS, and USDT. Gauntlet has proposed updating the risk parameters (Tally), but these proposals have not yet been approved by the governance council. Before the proposal is approved, Gauntlet suggests suspending withdrawals for the affected tokens. This implies that borrowing or withdrawing liquidity for Ethereum USDS, USDC, and USDT tokens in Compound v3 will be temporarily halted. Yesterday, Stream Finance disclosed a loss of $93 million in its fund assets, with Elixir having an exposure of $68 million due to the emergence of liquidity crises in Elixir’s deUSD and sdeUSD.
