YIP-86: Resupply Bad Debt Repayment Loan

Proposals Finance
1

Summary

  • This proposal outlines a $1.13M loan agreement between Yearn and its sub-DAO, Resupply, to cover outstanding reUSD bad debt following a recent exploit.
  • Yearn agrees to forego its staking revenue throughout the duration of the loan.
  • The loan will be repaid in full, with 6% interest.

Background

  • Following a $10M hack, Resupply is seeking a loan from Yearn treasury to clear remaining bad debt and return the protocol to profitability.
  • Resupply has generated $140k in stablecoin revenue via Yearn’s permastaker since launching in March (approx. $46k/mo).
  • Yearn currently owns 11.58% of the DAO via its staked RSUP.
  • Of the original $10M debt, a significant amount has already been eliminated:
    • $6M was covered by Resupply’s Insurance Pool
    • $1.4M donated by c2tp.eth
    • $818k donated by Convex Finance
    • $643k donated by Resupply treasury
  • The remaining ~$1.13M of reUSD bad debt is to be offset via protocol revenue (Yearn and Convex permastakers)
  • In order to fully erase the bad debt from Resupply’s markets and help restore user confidence in reUSD solvency ASAP, we are proposing Yearn front this future revenue via a loan to be repaid over time, with interest.

Specification

Loan Terms

  • Principal: 1.13M crvUSD
  • Interest: 6% APR
  • Total Repayment: Principal + interest accrued on outstanding balance at 6% APR, 100% of repayment as crvUSD
  • Repayments will be tracked via smart contract and automatically sent back to Yearn’s treasury as yvcrvUSD-2

Repayment Structure

  • Both Yearn and Convex agree to reclassify its permastaker revenue as loan repayments, and direct 100% of it as weekly payments toward loan repayments.
  • Repayments will be transferred on an automated basis from Yearn and Convex permastakers
  • These sources comprise 34.6% of total protocol revenue
    • Pre-hack: ~$31,446/week (~$1.64M/year)
  • The aim is to have a full repayment within one year. If after 4 months, repayment is off-track, Resupply team will commit to voting in favor of adding a new protocol-level weekly revenue split as an additional source of revenue to help speed up the repayment process.
  • As a part of this tracking, Resupply will provide monthly updates to Yearn DAO regarding repayment progress

For: Yes, provide the loan with these terms.

Against: No, do not provide the loan.

  • For
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