Overview
Resupply Finance is a CDP (Collateralized Debt Position) protocol designed to issue a native stablecoin, reUSD, against ERC-4626 compliant lending receipt tokens. These tokens are sourced from lending markets with strong risk profiles, namely FraxLend and CurveLend. Unlike traditional CDP systems, Resupply focuses exclusively on receipt tokens representing deposits into stablecoin and blue-chip crypto lending pools, while avoiding collateral exposure to governance tokens or overly volatile assets.
The protocol’s design prioritizes minimal governance surface area, robust oracle, and strict access controls. The primary risks analyzed in this framework are:
- Collateral Quality
- Oracle and Pricing
- Governance and Access Controls
- Liquidation and Solvency Risk
- Systemic and Protocol-Specific Risks
Resupply Collateral Standards
Resupply limits collateral onboarding to ERC-4626 compliant lending receipt tokens from:
- FraxLend: Isolated lending markets primarily featuring frxUSD as the deposit token. Known for conservative lending parameters, configurable interest rate models, and trustless design.
- CurveLend: Isolated lending markets primarily featuring crvUSD as the deposit token. Known for conservative lending parameters, soft liquidations, and trustless design.
While there are no immediate plans for it, the concept of “curator” vaults (e.g. Yearn V3) as collateral may be considered in the future. Specifically, vaults which have crvUSD or frxUSD as underlying and allocate to specific markets already supported by Resupply. Curators for such vaults may be the Resupply DAO itself, or an external entity with an extensive track record of excellent risk management (e.g. Yearn, Llama Risk, etc).
Collateral specification and quality criteria:
- Must be an ERC-4626 compliant vault share token from FraxLend, CurveLend, or Yearn representing an underlying of either frxUSD or crvUSD.
- Collateral assets must be supply receipts to isolated markets for high-quality/robust stablecoins or blue-chip crypto assets (e.g., ETH, BTC).
- Lending markets must have:
- Proven solvency history
- Transparent interest rate models
- Low governance risk and limited upgradability
Oracle and Pricing Mechanism
Accurate pricing is critical for lending systems. All underlying borrowing collateral on CurveLend or Fraxlend must use robust and proven oracle systems for their pricing that protect against manipulation.
For its own stablecoin, Resupply prices 1 reUSD as either 1 frxUSD or 1 crvUSD (depending on the collateral’s underlying token). As a result, Resupply can fully remove any dependencies on additional external and third-party USD oracles. This choice increases the UX and safety of positions against any sudden volatile spike or drop. However, while crvUSD and frxUSD are battle-tested stablecoins, the protocol must therefore assume additional risk associated with their performance.
Because all accepted receipt tokens from FraxLend and CurveLend are ERC-4626 vaults redeemable for either frxUSD or crvUSD, collateral pricing can always be evaluated directly at the level of the vault token using functions such as convertToAssets() or convertToShares().
Access Controls and Governance
Resupply’s core operations are designed to be immutable, with a limited set of upgradeable parameters controlled by staked RSUP token holders – subject to a 7 day voting period + 1 day execution delay. Further, 30% of the governance token supply is permanently staked and held by the two backing DAOs: Convex Finance and Yearn Finance.
Governance token holders can vote to update protocol parameters such as:
- Collateral onboarding
- Debt limits
- Interest rates
- Incentives and emissions rates
Additional roles include:
- Treasury Manager: ability to spend treasury funds
- Guardian: ability to pause markets and cancel malicious governance votes
All permissioned functions and governance mechanics must undergo regular review.
Liquidation and Solvency Risk
Liquidation safety of underlying borrowing collateral is a critical component of reUSD’s stability:
-
Liquidation thresholds and LTV ratios are determined conservatively based on:
- Collateral volatility
- Oracle latency and price deviation risk
-
Liquidation incentives are distributed atomically to liquidators. Like redemptions, liquidations are permissionless to execute.
-
An Insurance Pool consisting of reUSD deposits from yield farmers acts as first-loss capital in the case of bad debt.
reUSD peg mechanisms are supported by:
- Permissionless redemptions, in a similar fashion as Liquity Protocol
- Debt ceilings per market
Systemic Risk Considerations
Key risks and mitigations include:
-
Dependency on frxUSD/crvUSD peg performance
- Mitigated by governance + guardian ability to instantly set debt limits to 0 on specific markets.
-
Dependency on Fraxlend/CurveLend solvency
- Mitigated by governance + guardian ability to instantly set debt limits to 0 on specific markets.
- Capital in the insurance pool is used to pay off any bad debt incurred.
-
Contract or vault upgrade risk
- Limited by use of ERC-4626 vaults with immutable accounting or verified upgrade paths.
-
Protocol liquidity risk
- reUSD supply is bounded by on-chain collateral liquidity.
-
Standardization risk
- Mitigated by the uniformity of ERC-4626 interfaces, which simplifies accounting and integration risk.
Security Audits, Continuous Review & Bug Bounty
Resupply follows a “security‑first” lifecycle that combines multiple independent audits, continuous monitoring, and an open bug‑bounty program. In addition to formal audits, Resupply has an active engagement with a reputable security researcher, as well as an open bug bounty program with bounties up to $250,000.
Conclusion
Resupply Finance represents a specialized, risk-minimized approach to CDP design by focusing on low-risk stablecoins, represented as ERC-4626 receipt tokens from established lending protocols. Its narrow collateral whitelist, simple pricing logic, and hardened access controls create a secure environment for issuing reUSD. Ongoing review of oracle health, collateral performance, and governance controls is essential to maintaining solvency and peg stability.