DeFi Protocol Resupply Proposes Burning 6 Million reUSD After $10M Exploit

Decentralized finance (DeFi) protocol Resupply is moving forward with a recovery plan after suffering a $10 million exploit earlier this week. In a newly published proposal, the stablecoin platform suggests burning six million reUSD tokens from its insurance pool to help stabilize the protocol and manage the fallout.

Resupply, which issues the reUSD stablecoin backed by lending market liquidity, confirmed that the attacker exploited a vulnerability in its crvUSD-wstUSR trading pair. According to a post-mortem released on June 28, the exploit targeted a flaw in the platform's oracle and exchange rate calculations, allowing the attacker to manipulate the share price and bypass solvency checks.

Resupply Recovery Plan

Resupply Recovery Plan Overview The Resupply protocol suffered 10M reUSD in bad debt when it was hacked earlier this week. The attack and technical details are out of scope for this document but can be found here. Stolen funds remain on-chain. The situation is being monitored and necessary steps are being taken. This document outlines a proposed set of governance actions aimed at eliminating protocol bad debt and providing retention incentives for affected users. The team aims for a quick resol…

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In response, Resupply paused the compromised trading pair and temporarily froze the insurance pool, which serves as a safeguard to protect lenders and uphold protocol integrity.

“Stolen funds remain on-chain,” the team noted. “The situation is being monitored and necessary steps are being taken.”

To date, the Resupply treasury has covered 2.86 million reUSD, leaving an outstanding bad debt of approximately 7.13 million reUSD. The current proposal aims to burn 6 million reUSD—roughly 15.5% of the total reUSD in the insurance pool—as a way to absorb the bulk of this debt.

The remaining 1.13 million reUSD would be repaid gradually through future protocol revenue, which may include fees or an over-the-counter (OTC) RSUP token sale, pending DAO governance approval. RSUP is Resupply’s native governance token.

Resupply crvUSD-wstUSR Market Post Mortem

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If approved, the token burn would be implemented three days after voting concludes.

Retention Program for Affected Users

To retain user confidence, Resupply is also preparing a retention initiative for users who experienced losses in the insurance pool due to the exploit. Affected depositors will receive additional RSUP token rewards for continuing to provide coverage after the token burn.

However, participation in the program is optional. Users will have the ability to opt out and withdraw their funds, though the retention incentives will only apply to those who choose to stay.

The protocol clarified that the incentive program is not a reimbursement, but may partially offset the losses depending on future RSUP performance.

"It is not intended to offset the slashing, though it may or may not do so," the protocol noted.