[Serenity Premium] ReSupply and $reUSD [Initial Review Mar 2025]

ReSupply is a new stablecoin project launched recently. The team behind it was the Convex and Yearn team. ReSupply is a CDP that allows users to mint stablecoin $reUSD against lending LPs in CurveLend and FraxLend. Now it has juicy incentive programs for all stakeholders. This article takes a quick look at the protocol's functions and evaluates the pros and cons of various incentive programs.

Base Concepts of ReSupply

Resupply is a CDP stablecoin protocol that enables users to supply crvUSD to CurveLend or or frxUSD to FraxLend and borrow reUSD against these positions. This mechanism allows users to amplify their yields, potentially making their stablecoins work up to 20 times harder, while maintaining minimal volatility-related risk due to stablecoin-to-stablecoin collateralization. The protocol offers attractive borrowing rates, calculated as the higher of half the market's lending rate, half the sfrxUSD rate, or a minimum of 2%. The protocol has an innovative redemption mechanism to maintain the reUSD peg. To ensure system stability, Resupply incorporates an Insurance Pool that manages liquidations and safeguards against unforeseen external risks.

Markets and Collaterals

Firstly, the direct collaterals of reUSD are crvUSD and frxUSD. In the event that either of the two stablecoins loses its peg, reUSD will be impacted negatively as well. In such situations, like any other CDP, liquidation will take place and if the depegs happen too fast, there will be bad debt to ReSupply Protocol. This could be a concern as frxUSD has a huge amount of protocol-owned frxUSD (or FRAX).

Secondly, selected markets from CurveLend and FraxLend are initially accepted as collaterals for reUSD.