Resupply has announced its intention to utilize $6 million from its insurance fund to cover losses related to the reUSD exploit. This decision has prompted significant discussion within the DeFi ecosystem.
Community Discussions on Resupply's Decision
Parts of the community have expressed concerns regarding Resupply's decision to cover losses from the reUSD exploit using $6 million from its insurance pool. Michael Egorov, co-founder of Curve, noted the challenges in identifying the exploit early.
> "The exploit was 'not the easiest thing to spot,' and argued that the insurance pool is specifically designed to cover exploit losses." - Michael Egorov, Co-founder, Curve
Financial Implications of the Incident
The financial impact of the incident was profound, with $10 million reUSD becoming bad debt within the protocol. Resupply's plan includes burning $6 million from their insurance pool and using future revenues to address remaining debts. Retention rewards are included for affected users.
Long-term Governance Implications
Resupply’s decision affects both the DeFi sector and related token ecosystems, especially those linked to the Curve platform. The compromise plan includes expedited governance voting, ensuring quick resolution and compensation pending community approval. Due to the unprecedented use of insurance reserves for handling protocol failures, the decision could have long-term impacts on protocol governance and insurance standards.
Resupply's decision to cover losses using the insurance fund continues to spark discussion and may set precedents for future insurance practices within the industry.
