Liquidity Exit Drain (Rug Stream): Gradual Capital Extraction in DeFi and Stablecoin Systems

Abstract

<b><i>Liquidity Exit Drain</i></b>, also referred to as a <b><i>Rug Stream</i></b>, describes a class of gradual capital extraction attacks in decentralized finance (DeFi) and stablecoin ecosystems. Unlike abrupt rug pulls or discrete exploit-based failures, Liquidity Exit Drains operate through prolonged, cumulative actions that remain within protocol-defined operational and governance boundaries. By exploiting trust persistence, governance opacity, and parameter flexibility, these attacks systematically siphon liquidity over extended time horizons while evading conventional audits and user detection. This paper formalizes <b><i>Liquidity Exit Drain</i></b> as a distinct economic attack class, examines its structural enablers and execution patterns, and outlines why existing security, audit, and monitoring frameworks frequently fail to detect it. The analysis highlights the need for longitudinal economic oversight and governance-aware risk assessment beyond static code correctness.