Compound has suspended multiple stablecoin lending markets on Ethereum to address the Elixir liquidity crisis

DeFi research and risk management company Gauntlet previously recommended that the Ethereum lending protocol Compound implement a temporary emergency pause on the following independent lending Comet markets in v3: USDC on Ethereum, USDS on Ethereum, and USDT on Ethereum. This proposal has now been approved, and after the pause, withdrawals for USDC and USDS in the lending market resumed on November 6.

Compound stated that it will gradually restore the markets while ensuring the security of the system. This move aims to address the liquidity crisis of deUSD and sdeUSD under Elixir, both of which have been listed as collateral against USDC, USDS, and USDT on Ethereum. On November 4, Stream Finance disclosed that its fund assets suffered a loss of $93 million, with Elixir bearing an exposure of $68 million, leading to a liquidity crisis for its stablecoins deUSD and sdeUSD.