James Richardson
Resupply, a decentralized stablecoin protocol leveraging lending market liquidity, has submitted a proposal to burn six million reUSD tokens from its insurance pool. The move is part of a broader recovery strategy following a recent $10 million exploit.
The exploit, which targeted the crvUSD-wstUSR pair, was caused by a sophisticated manipulation of the platformโs price oracle and exchange rate logic, according to a June 28 post-mortem. The attacker exploited a flaw in the solvency check mechanism, tricking the protocol into miscalculating collateral ratios.
In response, Resupply paused trading activity on the compromised pair and temporarily froze withdrawals from the insurance fund โ a safeguard designed to protect lenders from systemic failures.
Insurance Pool Burn Proposal Emerges
To help cover the loss, the protocolโs treasury has already deployed 2.86 million reUSD, leaving an unpaid debt of roughly 7.13 million reUSD. The current proposal recommends eliminating 6 million reUSD of this bad debt via a token burn from the insurance pool โ representing approximately 15.5% of its total holdings.
According to the proposal:
โThe remaining 1,131,168 reUSD will be gradually paid down by the DAO using various revenue sources, including protocol fees and possible over-the-counter RSUP token sales.โ
RSUP is Resupplyโs governance token, and any final decision on the remaining debt will be determined by community vote.
Retention Program for Affected Users
To rebuild trust, Resupply is introducing a user retention program aimed at participants who suffered losses due to the insurance poolโs shortfall. Affected users will be eligible for a new stream of RSUP token incentives if they choose to keep their capital within the pool.
โWhile this incentive is not guaranteed to fully offset losses, it aims to reward long-term commitment,โ Resupply noted.
Voting on the proposal is currently live, with implementation set to occur three days after approval.
