Stellar's decentralized finance sector suffered a sharp contraction this week, with total value locked (TVL) — the standard gauge of capital sitting in DeFi protocols — falling from an all-time high of $270 million on August 22, 2026 to roughly $98 million by August 27. The decline followed an exploit on the Comet AMM BLND-USDC liquidity pool backing the Blend protocol, a lending application built on Stellar's Soroban smart-contract platform and, at its peak, home to more than half of the chain's entire DeFi TVL.

Why Stellar's TVL Plunged Nearly 60% in a Single Day

According to data on DefiLlama, Stellar's TVL collapsed by 60% in a single day, dropping to $98 million as of August 27. The incident drained approximately $717K through a same-asset USDC swap accounting bug, causing Blend's TVL to fall from more than $150 million to near zero after the protocol's backstop pool was paused. Notably, the exploited amount is a small fraction of the drawdown: roughly $170 million in value left the chain against approximately $717K stolen, meaning most deposits exited after the backstop pause rather than through the exploit itself.

The move was flagged on X by BSCN:

What on earth just happened to Stellar's TVL?! According to data on DefiLlama, @StellarOrg 's TVL has collapsed -60% in a single day, down to just $98M at time of writing on August 27. The news comes just days after $XLM hit a new all-time high TVL of nearly $270M. Does anyone… pic.twitter.com/HnNMwM3Kby

— BSCN (@BSCNews) August 27, 2026

The episode illustrates a structural feature of smaller DeFi ecosystems: when one protocol dominates a chain's TVL, a single application-level bug can erase most of a network's headline DeFi figure even as the underlying blockchain continues to operate normally.

Despite the setback, Stellar's tokenized real-world asset (RWA) market has grown to more than $3 billion, a contrast that underscores the disconnect between robust network fundamentals and concentrated DeFi vulnerabilities. Stellar, a payments-focused layer-1 launched in 2014, has increasingly focused on asset tokenization, and that market now dwarfs its DeFi sector. On the price side, Stellar Lumens (XLM) slipped 2.82% to trade at $0.18, holding above its major support level for the eighth consecutive day, according to SoSoValue price tracking data.

Trend Switch Scenario If XLM Maintains This Level

At current levels, XLM's top-tier investors are still working to grasp the bottom of the market correction. The Chaikin Money Flow (CMF) indicator shows slightly negative readings on the 4-hour and daily charts, while the one-hour XLM price chart projects a neutral trend shift as top buyers have yet to step in.

XLM is trading about one cent above the SuperTrend level of $0.1707, a position the analysis frames as an advantage for bulls. In the futures market, long positions absorbed $191.33K in liquidations out of a $205.61K 24-hour total, even though the altcoin's Open Interest (OI) weighted funding rate has remained in the green for ten consecutive days.

The $0.195 level stands as the nearest bullish target cited in the analysis, while XLM continues to demonstrate a high price correlation with Bitcoin (BTC). Bitcoin pulled back to $78,700 on Friday evening, and Stellar Lumens mimicked the roughly 2% backdrop while maintaining a 5% price gain over the past 30 days. From here, the key watch points are operational rather than technical: whether Blend reactivates its backstop pool, whether deposits return to the Comet pools it depends on, and whether DefiLlama's TVL curve stabilizes — observable milestones that will show whether the damage remains confined to a single protocol.