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What is the “blue” loop on your VS12-60WD and VS12-75WD transformers for?

This wire is only for OEM type applications. It is used to attach a 1 meg ohm linear taper potentiometer for dimming via a potentiometer. You do not have to use the blue loop to make the unit work, it is only there if you want to use a potentiometer to dim your fixture (example: Desk top lamp).