What happened
Scream accumulated roughly $35 million in bad debt in May 2022 after the fUSD and DEI stablecoins lost their pegs. The protocol treated those assets as worth $1, so borrowers could post impaired collateral and withdraw more liquid assets than the collateral was worth.
Technical root cause
Fixed $1 collateral prices did not reflect the depegging of fUSD and DEI, allowing impaired collateral to support excessive borrowing. The reported loss represents bad debt rather than a direct treasury withdrawal.
How it happened
- fUSD and DEI traded below their intended dollar peg.
- Scream continued to value those assets at $1.
- Borrowers deposited overvalued collateral and withdrew liquid assets such as USDC, DAI, wETH or wFTM.
- The resulting positions became bad debt; Scream paused affected markets and attempted to seize collateral.
- The reported loss therefore describes depeg-driven bad debt, not necessarily a direct treasury theft.
Protocol details
Classification
Stablecoin / Borrowing and Lending
Protocol Type
Lending
Affected asset / contract
Scream
Protocol links
Website
@Screamdotsh
Evidence
- report Report archive.is
- report Report defillama.com
- analysis Blockbytes: State of the Opera - May 2022 blockbytes.com
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