In a bear market, funds are crowded to find 'mining' opportunities, pursuing stable returns. Resupply has seized this demand, with TVL soaring to nearly 100 million USD in less than a month, and APY stabilizing at 20%+!

In the current context where DeFi yields are generally being 'compressed' low, Resupply, with its 'circulating loan design, low borrowing rates, high dividends + liquidity bribes' strategy, backed by the ecosystem support of Curve, Convex, and Frax, has maintained a foothold.

1. Born for circulating loans: low borrowing rates + token subsidies
Resupply is an over-collateralized stablecoin project where its stablecoin reUSD is issued against Curve's crvUSD and Frax's frxUSD as collateral. The secret to its rapid growth lies in the mechanism designed for leveraged looping, where the borrowing rate of reUSD is the maximum of the following three values:

- Half of the base borrowing rate (the rate on Curvelend and Fraxlend)
- Half of the 'risk-free rate' (defined as the yield of sfrxUSD)
- A fixed minimum value of 2%

Since the collateral will earn interest by being deposited in Curvelend and Fraxlend, and the cost of borrowing reUSD is artificially designed to be 'half,' this half becomes the space for arbitrage in circulating loans. In addition, 25% of RSUP token emissions reward borrowers, equivalent to a 'yield boost,' thus attracting a large amount of capital to open positions for borrowing, leading to a continuous increase in the scale of reUSD.

2. High dividends + high liquidity bribes, combined with low circulation design
The stablecoin project of the circulating loan mechanism (such as Resupply) has evident inherent selling pressure: because users need to sell reUSD for crvUSD or frxUSD to continue the circular operation after borrowing reUSD. To resolve this issue, Resupply has built a deep liquidity pool on Curve and reduced the selling pressure from large local currency bribes through high dividends.

- Deep liquidity pool
50% of RSUP emissions are used to bribe voters on Curve, attracting veCRV holders to vote in support of the reUSD pool. Currently, the size of the reUSD/scrvUSD pool on Curve has reached 50 million USD, and the size of the reUSD/sfrxUSD pool has reached 17 million USD, which can achieve around 20% APY in these two pools, which is indeed very attractive.

- High dividends and lock-up incentives
However, large-scale local currency bribes for liquidity will lead to price crashes. Resupply's solution is to give its local currency RSUP substantial dividends, with 70% of protocol income going to RSUP stakers (with a 14-day unstaking period), and governance rights are given to RSUP stakers, further strengthening the incentive to lock up.

- Low circulation design
In addition, the release of RSUP tokens is extremely slow. Although its initial total supply is 60 million, it will inflate to 100 million over 5 years, followed by a 2% annual inflation rate, but currently, its circulating supply is only about 1.4 million, which also allows its RSUP dividend yield to stabilize at a high level, currently at 200%, and about 70% of the circulation is locked up. The FDV is currently at 140 million USD, and the circulating market value is at 3 million USD.

3. Four ways to earn APY
Resupply offers various yield strategies to meet the needs of users with different risk preferences:

- Leveraged circulating
Deposit crvUSD/frxUSD, borrow reUSD, and operate in a loop:
For example: deposit 1 million crvUSD, borrow 950,000 reUSD, sell it for crvUSD and deposit again, continuing the loop.

- Providing liquidity (20% APY):
Provide liquidity in the reUSD/scrvUSD pool on Curve, deposit in Convex, and earn trading fees + CRV rewards. The current pool APY is approximately 20%.

- RSUP lock-up dividends (200% APY):
Lock up RSUP to enjoy 70% of protocol income dividends, with the current dividend yield at 200%, but since there is no hedging method for RSUP, it is only suitable for users with a certain risk appetite.

- Insurance pool earnings (20%+ APY):
Holding reUSD allows you not only to earn liquidity incentives on Curve but also to deposit in the insurance pool (participating in liquidation to obtain liquidation earnings but also bearing the risk of bad debts), earning part of the protocol income sharing and RSUP rewards. 25% of RSUP emissions are allocated to the insurance pool, but withdrawing reUSD from the insurance pool requires a 7-day unstaking period.

4. Potential risks
Although reUSD has a low theoretical possibility of decoupling due to its over-collateralization property, and borrowers have the incentive to buy back to repay debts when the price of reUSD falls, the growth momentum of the TVL supported by circulating loans will also be limited, because:

Larger TVL → More reUSD issuance → Greater selling pressure (needs to be sold for crvUSD/frxUSD) → Requires deeper liquidity pools → Requires more RSUP bribes → Requires higher RSUP prices.

The rise in RSUP prices relies on higher dividend rates, which need higher TVL and protocol income support, forming a 'left foot stepping on the right foot' cycle, which may not be self-consistent at some point. Meanwhile, RSUP continues to inflate, further increasing the pressure to maintain the dividend rate.