PancakeSwap monitors USDX vaults for potential bad loans

PancakeSwap and ListaDAO are monitoring several vaults where sUSDX and USDX are used as collateral. The vaults show alarmingly high borrowing rates, as well as no repayments. 

PancakeSwap and ListaDAO announced they are observing lending vaults on MEV Capital and Re7 Labs. The vaults hold USDT and USD1 as stable and liquid assets, but use the more volatile sUSDX and USDX as collateral. 

We are aware and has been closely monitoring the @MEVCapital USDT Vault and @Re7Labs USD1 Vault, where collateral assets ($sUSDX and $USDX) continue facing abnormally high borrowing rates without repayment activity.

As an on-chain P2P lending protocol, Lista Lending has been…

— Lista DAO (@lista_dao) November 6, 2025

ListaDAO expressed concerns that the vaults showed extraordinary borrowing rates, but no repayments. The DAO, as a P2P lending protocol, was concerned about potential DeFi instability. 

USDX and sUSDX offer high-risk collateral

The freely available USDX asset already trades at a discount at $0.68. The staked version, sUSDX traded at a premium of $1.13, though it recently fell to $1.06. The staked version cannot be freely swapped or released, hence the usage of lending vaults to access a more liquid stablecoin. 

Unless the protocols address the imbalance of the lending vaults, depositors may face problems with bad loans and loss of value. 

The troubles with the USDX synthetic stablecoin started just days after another asset, XUSD, diverged from its $1 price. The token caused losses from lending of up to $93M. The event drew attention to lending protocols and their various risk levels, as well as the practice of taking funds from low-risk protocols to seek higher, riskier returns.  

Lista DAO called for MEV Capital and Re7 Labs to protect user interest and communicate transparently on their vaults. Re7 Labs had already responded to the effect of the Stream Finance insolvency and may face a similar situation once again. 

DeFi accepts riskier stablecoins as collateral

On certain decentralized protocols, any type of vault can be created. The risk and yield of that vault are independent of the rest of the market, and may diverge significantly from average levels. 

The risky vaults themselves are not a problem if the depositors freely choose them. However, in DeFi, some low-risk protocols achieved yields by picking vaults with a higher risk. Thus, some users may be exposed to risky vaults without knowing. 

Recently, on-chain data showed that up to $750M may be deposited into vaults where withdrawals are impossible. Some lending vaults offer high rates, but users cannot get back their high-liquidity stablecoins. 

Research noted MEV Capital carries the riskiest vaults, although other protocols may face a threat from bad loans and low liquidity. 

ok let me be specific@MEVCapital USDC = $225M stuck
Smokehouse USDC = $199M stuck
Hyperithm USDC = $97M stuck
Gauntlet Frontier = $63M stuck
Alpha USDC = $45M stuck
Clearstar = $43M stuck
Gauntlet Core = $32M stuck
Relend = $13M stuck
Steakhouse infiniFi = $10M stuck
Edge… pic.twitter.com/6hFlu1Fupi

— Deepcryptodive.eth 🏴‍☠️⟠ (@deepcryptodive) November 4, 2025

Problems with DeFi lending vaults may cause a loss of trust. As more traders shifted to stablecoin positions, they were seeking passive yield to grow their value. At the same time, lending vaults were not low-risk, especially with the addition of new algorithmic stablecoins. 

DeFi lending still carries over $69B in value locked, of which over $32B are in Aave vaults. Yields vary by protocol and vault, but lately, some of the lending protocols like Morpho have seen increased scrutiny for especially high-risk vaults.