The recent collapse of Stream Finance's xUSD and subsequent failures of Elixir's deUSD and other synthetic stablecoins have highlighted significant structural issues within the DeFi ecosystem. These events resulted in a 40-50% loss in total value locked for yield-bearing stablecoins within a week, underscoring problems in risk management, transparency, and trust. Stream Finance's recursive lending model, which inflated xUSD supply 7.6 times beyond its verified collateral, triggered a chain reaction affecting multiple protocols, including Elixir, Morpho, and Euler, with total risk exposure reaching $285 million. Analysts note that the industry continues to repeat past mistakes, with high-yield promises often concealing unsustainable leverage and opaque strategies. These failures emphasize the fragility of interconnected stablecoin systems and the urgent need for improved infrastructure and risk controls.