What's Driving Token Prices? November 6, 2025

xUSD (-89%) - On Monday, Stream Finance, a DeFi yield protocol, announced that one of its managers incurred a $93M loss on assets backing the Staked Stream USD (xUSD) stablecoin. In response, Stream disabled xUSD deposits and withdrawals, but since the token trades elsewhere, it quickly lost its peg. The issue was compounded by xUSD’s integration across several lending protocols, which used a “modular vault architecture” (i.e., siloed vaults designed to contain risk). Many of these vaults on protocols like Morpho, Euler, Gearbox, and Silo—employ “looping” strategies, in which users repeatedly lend and borrow the same assets to amplify yield. While effective under normal conditions, these strategies unraveled as xUSD depegged, triggering mass redemptions. The event underscores the importance of understanding both yield strategies and their managers before allocating capital. Although not directly responsible, DeFi protocols such as Silo (-14%), Morpho (-15%), and Euler (-32%) were affected. Silo has since announced legal action against Stream Finance to recover user losses. xUSD is down 89%.
BAL (-16%) - Early Monday morning, decentralized exchange Balancer suffered a $110M exploit. The attack targeted the v2 version of its Composable Stable Pools, leading to unauthorized withdrawals of wrapped ETH and staked ETH derivatives osETH and wstETH. The breach is believed to have stemmed from a rounding-error bug where small numerical approximations in code create exploitable inaccuracies, combined with weak access control mechanisms. Because Balancer is deployed across multiple chains, losses occurred on Ethereum, Base, Polygon, Sonic, Arbitrum, and Optimism. On Berachain, the project opted to fork the chain to prevent losses.
ZEC (+42%) - One token that has defied the broader market downturn is Zcash, a privacy-focused layer-1 network. Interest in the project has surged in recent weeks as its opt-in privacy features—known as shielded tokens and shielded transactions—are viewed as a compelling alternative to Bitcoin, which some argue has become too “mainstream.” Like Bitcoin, Zcash uses a proof-of-work consensus mechanism and a fixed supply schedule, but it distinguishes itself through zero-knowledge proofs that enable fully private transactions. In October, ZEC held in private pools rose 11%, while shielded transactions increased 36%, suggesting growing on-chain usage beyond speculation. Adding to the momentum, Arthur Hayes recently predicted that ZEC could reach $10,000, further fueling interest. The Electric Coin Company, which supports Zcash development, also released its Q4 roadmap, emphasizing improvements to user privacy and wallet usability.

DISCLAIMER: This commentary is not intended to be investment advice, investment research, or a recommendation. Please consult your investment professional for your own circumstances."

Disclaimer: This commentary is provided as general information only and is in no way intended as investment advice, investment research, legal advice, tax advice, a research report, or a recommendation. Any decision to invest or take any other action with respect to any investments discussed in this commentary may involve risks not discussed, and therefore, such decisions should not be based solely on the information contained in this document. Please consult your own financial/legal/tax professional.

Statements in this communication may include forward-looking information and/or may be based on various assumptions. The forward-looking statements and other views or opinions expressed are those of the author, and are made as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated and there is no guarantee that any particular outcome will come to pass. The statements made herein are subject to change at any time. Arca disclaims any obligation to update or revise any statements or views expressed herein. Past performance is not a guarantee of future results and there can be no assurance that any future results will be realized. Some or all of the information provided herein may be or be based on statements of opinion. In addition, certain information provided herein may be based on third-party sources, which is believed to be accurate, but has not been independently verified. Arca and/or certain of its affiliates and/or clients may now, or in the future, hold a financial interest in investments that are the same as or substantially similar to the investments discussed in this commentary. No claims are made as to the profitability of such financial interests, now, in the past or in the future and Arca and/or its clients may sell such financial interests at any time. The information provided herein is not intended to be, nor should it be construed as an offer to sell or a solicitation of any offer to buy any securities, or a solicitation to provide investment advisory services.