Ad-Hoc Update (Mar 23 ‘26)
Following the Resolv USR unbacked minting exploit over the weekend, Entropy would like to issue a quick statement affirming that DAO Treasury positions do not have exposure to, nor face losses from the exploit, and that the greater Arbitrum DAO Treasury remains unimpacted.
On March 22nd, a malicious actor compromised Resolv’s key infrastructure, resulting in the unauthorized minting of approximately 80M of uncollateralized USR tokens. The subsequent sales of new, unbacked tokens into secondary markets caused severe depegs in USR, wstUSR, and RLP. These tokens were utilized within several DeFi protocols across multiple chains and thus have wide-reaching impacts. Although small in comparison to impacts on other ecosystems, there are protocols on Arbitrum that have exposure to Resolv-related assets.
On Arbitrum, wstUSR was used as collateral for ~$631K of loans within Fluid across 5 vaults, causing the supply rates for USDC and USDT to briefly spike beyond 30%, but these have since reverted closer to the 10% range. The team has announced that a short-term loan has been secured to cover 100% of the bad debt currently in the protocol. The DAO’s active stablecoin manager, kpk, had ~$1M worth of USDC supplied to Fluid when the USR exploit took place, but this position was successfully divested without incurring losses on Sunday.
The only exposure to Resolv-related assets on Morpho’s Arbitrum instance comes from the RLP / USDC market, to which Clearstar’s High Yield USDC and kpk’s USDC Yield vaults have together supplied ~$5K worth of USDC. The DAO has no exposure to the market in question. Although the Gauntlet USDC Core vault, which the DAO has allocated ~$1.7M into, currently has the market included, the supply cap has been set to zero. The market is in the process of being removed from the vault, pending the timelock, with deposits into the vault paused until the removal is finalized.
The Euler Arbitrum Yield market has ~$500K USDC loans collateralized by RLP. RLP has been disabled as collateral within the market, and Euler Earn USDC on Arbitrum no longer allocates to Euler Arbitrum Yield, although it currently has ~$430K of exposure to the market. Arbitrum DAO has no exposure to Euler.
Entropy is continuing to actively monitor the consequences of the USR exploit and will provide further updates if necessary. Resolv has stated that the underlying collateral backing pre-exploit USR remains mostly unaffected, with “the only realized impact identified being approximately ~500k in redemptions processed prior to the pause”. According to Resolv, the team is preparing to enable redemptions for pre-incident USR as an initial step, potentially reducing or eliminating bad debt associated with impacted lending platforms. Further updates to affected protocols’ recovery rates for affected markets depend on the remediation process for USR, wstUSR, and RLP.