RESUPPLY FINANCE

DESCRIPTION OF EVENTS

Resupply is a decentralized stablecoin protocol that enhances the utility and yield potential of stablecoins like crvUSD and frxUSD. Backed by reputable DeFi players such as Convex and Yearn, Resupply offers immutable, non-custodial smart contracts audited for security. With a total of $77 million reUSD borrowed and $86 million in collateral, the protocol is designed for yield optimization while maintaining a strong emphasis on security and decentralization.

The platform operates by allowing users to supply these stablecoins to Curve Lend or Fraxlend, and then borrow reUSD against their lending positions. This process, known as re-hypothecation, lets users earn yield on their original stablecoin deposits while unlocking new capital (reUSD) for additional yield strategies.

At its core, Resupply focuses on maximizing yield with minimal risk. Users continue to earn lending interest as if they had deposited directly into Curve Lend or Fraxlend, but gain additional liquidity through reUSD borrowing. Since users borrow a stablecoin (reUSD) against other stablecoins, the protocol significantly reduces exposure to market volatility. Borrowing rates are also designed to be competitive—always at least 2%, and pegged to favorable benchmarks like the market lending rate or sfrxUSD rate.

The protocol’s Insurance Pool serves as a critical safety net. It ensures the health of the system by liquidating undercollateralized positions and covering losses in case of unexpected market failures related to supported collateral. Users who deposit reUSD into the Insurance Pool receive a portion of the protocol's revenue and RSUP token rewards, acknowledging their role in sharing risk.

Unfortunately, audits of the smart contracts were performed based on an assumption that the vaults would be deployed with "meaningful collateral". Vaults were deployed with no collateral.

The ResupplyFi exploit was a textbook example of a donation attack on an ERC4626 vault, a known vulnerability that arises when newly deployed lending markets have insufficient or zero liquidity. The attacker exploited this classic flaw in under two hours, draining nearly $9.8 million from the protocol by manipulating exchange rate calculations through a trivial deposit.

The attack began with a small donation—just 2,000 crvUSD—sent to a freshly deployed cvcrvUSD vault with essentially no prior liquidity. The attacker then minted 1 wei worth of vault shares, which due to the vault’s near-zero share supply, inflated the exchange rate of the shares to astronomical levels. This manipulated vault price was reported by the protocol’s price oracle.

ResupplyFi calculated its collateral-to-debt ratios using a formula that divided a constant (1e36) by the oracle-reported price. When the oracle returned the massively inflated value (in this case, around 2e36), this caused a floor division rounding error—the result became zero, effectively making the calculated exchange rate = 0. From the protocol’s perspective, the attacker’s 1 wei of collateral was now worth an unlimited amount, and they had no borrowing restrictions.

With this broken math in place, the attacker deposited 1 wei of cvcrvUSD as collateral and proceeded to borrow $10 million in reUSD, which was the protocol’s full available liquidity. The attacker immediately converted the funds back into ETH, repaid the initial flash loan (which funded the attack), and laundered the rest through Tornado Cash and other addresses. The exploit involved two purpose-built contracts for orchestration and fund management, emphasizing that this was a planned and targeted heist.

The ResupplyFi exploit wasn’t a zero-day or an unknown vulnerability—it was an all-too-familiar flaw caused by a predictable combination of low-liquidity deployment, naive price calculations, and overlooked initialization checks. Despite audits and governance, it was an avoidable failure, and it underscores a deeper challenge in DeFi: bridging the gap between secure code and secure deployment.

Attack Transaction: 0xffbbd492e0605a8bb6d490c3cd879e87ff60862b0684160d08fd5711e7a872d3

Phalcon initially reported $9.5m USD. Most other sources place the loss figure at $9.8m USD.

The first public signal came from BlockSec’s Phalcon system, which flagged the attack in real-time with a tweet warning that ResupplyFi had suffered a $9.8 million loss. Within minutes, PeckShield confirmed the exploit, escalating awareness throughout the DeFi security and trading communities.

As news spread, prominent security firms and blockchain explorers began publishing on-chain data, exploit contract addresses, and damage estimates. BlockSec called out the vulnerability explicitly: another exchange rate manipulation on a low-liquidity vault, reinforcing that this was a known and preventable class of attack. Security researchers, developers, and DeFi veterans quickly began analyzing the exploit, pointing out the textbook nature of the ERC4626 donation attack.

About two hours after the exploit was executed, ResupplyFi released a brief damage control statement, admitting the exploit had occurred in the wstUSR market and stating that the affected contract had been paused. Many users criticized the delayed and minimal communication.

ResupplyFi paused the affected market and began compensating users through its insurance fund, treasury, and even personal contributions from Convex’s C2tP, totaling over $2.8 million. However, the situation sparked intense debate about audit responsibilities, protocol deployment practices, and user understanding of insurance mechanisms.

There was strong criticism toward the ResupplyFi team for launching a vault without safeguards or proper initialization checks.

While some users vented frustration, especially over the misunderstood insurance pool mechanics, others praised Convex’s C2tP for stepping in personally with over $1.4 million in reimbursements. This act of goodwill helped calm tensions and showed that at least some leadership was willing to absorb losses.

ReSupply has reportedly been compensating users through insurance fund, treasury, and even personal contributions from Convex’s C2tP, totaling over $2.8 million. It remains unclear how much more will be repaid, whether further contributions will come from the team or community, or if users will bear the remaining losses. Insurance pool users are still discovering that they accepted shared risk, sparking confusion and discontent about how “insurance” actually worked.

While $2.8 million has been repaid (from the insurance pool, Convex, and treasury), there’s still around $7 million unrecovered from the $9.8 million total loss. It remains unclear how much more will be repaid, whether further contributions will come from the team or community, or if users will bear the remaining losses. Insurance pool users are still discovering that they accepted shared risk, sparking confusion and discontent about how “insurance” actually worked.

ResupplyFi has promised a complete post-mortem, but at the time of the latest update, only partial analyses and public statements have been released. Future smart contract upgrades or governance changes may be proposed to implement anti-donation attack protections, like enforcing minimum collateral thresholds or price manipulation resistance in exchange rate calculations.

Explore This Case Further On Our Wiki

ResupplyFi, a decentralized stablecoin protocol built to optimize stablecoin yield via rehypothecation, suffered a $9.8 million exploit due to a well-known ERC4626 donation attack. A freshly deployed vault with no initial collateral allowed an attacker to manipulate exchange rate calculations by donating a small amount of crvUSD and minting just 1 wei of vault shares. This inflated the price reported by the oracle, and due to flawed math (floor division of 1e36 by the inflated price), the exchange rate was calculated as zero—removing borrowing limits. The attacker used this loophole to borrow nearly the entire reUSD liquidity in the protocol and laundered the funds through Tornado Cash.

Tony Kebot - "regarding the ResupplyFi hack, preliminary investigation shows that the ResupplyPair contract uses an empty ERC4626 wrapper as the price oracle. thus the hacker used only 2 crvUSD to borrow 10M reUSD...." - Twitter/X (Jul 2)
Funding 1 ETH From TornadoCash - Etherscan (Jul 2)
ResupplyFi - "Resupply has experienced an exploit in the wstUSR market. The affected contract has been identified and paused. Only the wstUSR market was impacted and the protocol continues to function as intended. A full post-mortem will be shared as soon as a complete analysis of the situation has been conducted." - Twitter/X (Jul 2)
Attack Transaction - Etherscan (Jul 2)
Phalcon - "Alert! Phalcon system detected an attack transaction to @ResupplyFi caused ~9.5M USD loss." - Twitter/X (Jul 2)
PeckShield - "Hi @ResupplyFi you may want to take a look" - Twitter/X (Jul 2)
ResupplyFi - Rekt (Jul 2)
Resupply Finance Homepage (Jul 2)

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