Reservoir Survives $400M Run With Zero Losses

Reservoir handled a $400M liquidity run with zero losses thanks to full backing and fast redemptions during the DeFi market scare.

The team avoided risky xUSD exposure early, which protected users when leveraged tokens triggered fear across lending markets.

Reservoir kept strong liquidity across major platforms, allowing smooth redemptions and steady operations through extreme market stress.

Reservoir faced a historic liquidity crisis across DeFi markets and handled it with unusual strength. The protocol endured over $400 million in redemptions within two weeks. The run happened on multiple chains as fear spread after several stablecoin failures.

The team maintained a perfect 1:1 redemption process. Users saw no slippage. They saw no delays. They saw no losses. The event shocked DeFi because Reservoir operated inside several active markets that suffered extreme stress

However, the protocol kept full backing for every rUSD, srUSD, and wsrUSD token. The team also monitored risks closely as contagion spread from leveraged “black-box” yield tokens like Stream’s xUSD. Hence, the protocol stayed liquid when others collapsed.

Why Reservoir Faced Pressure

The pressure started after Stream confirmed major losses through a related third party. Liquidity vanished across Morpho and other lending markets. Besides, curators and users rushed to exit any ecosystem connected to leveraged assets. Reservoir saw this trend early. The team avoided xUSD from the start

Moreover, they increased monitoring in October when volatile markets shook collateral values. The Balancer exploit on Berachain’s BEX then added stress. It froze about 7% of Reservoir assets during the exact moment fear escalated. However, the chain reopened. Funds moved safely. The team credited Berachain for quick coordination.

How the Protocol Held Its Peg

Reservoir relied on strict backing rules. The protocol held mainly USDC-denominated assets across Morpho, Aave, and IPOR Fusion. Additionally, the team kept hundreds of millions in instantly redeemable positions. Users accessed liquidity immediately

Consequently, Reservoir transformed into a major exit door for the ecosystem, which pushed the redemption wave even higher. The team also accelerated the retirement of the older steakRUSD looping vault. They shifted focus toward isolated lending positions to reduce cross-market risks.

Moreover, Reservoir prepared long-term tools. The team plans trUSD, a term-based product with fixed durations and higher yields. They also aim to scale IPOR Fusion vaults and expand supply across major chains. “The biggest test faced by Reservoir to date has been passed,” the team said.

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