[ARC] - Chaos Labs Supply and Borrow Cap Updates - Aave V3 - 2023.02.24

To reduce governance overhead and not delay the implementation of the changes (including the update for Arbitrum and Polygon) any further, we propose the following:

Optimism

As both proposals are very similar, we suggest going straight to AIP with a joint proposal, updating Chaos’ original recommendations while incorporating Gauntlet’s recommendations for LINK, WBTC, and AAVE.

  • LINK

    • Both proposals have almost the same Supply Cap. We recommend incorporating Gauntlets’ recommendations as their suggested Borrow cap is slightly more conservative while still allowing room for significant borrowing (<10% utilization)
  • WBTC

    • We recommend incorporating Gauntlets’ recommendations as their suggested Supply and Borrow caps are slightly more conservative while allowing room for significant borrowing (<10% utilization). Both proposals effectively freeze the supply.
  • AAVE - both proposals effectively freeze supply.

We will continue monitoring these markets and propose updated supply caps with changing market conditions.

Recommendations:

Asset Current Supply Current Supply Cap Recommended Supply Cap Current Borrow Current Borrow Cap Recommended Borrow Cap
DAI 2,620,000 2,000,000,000 25,000,000 1,210,000 N/A 16,000,000
sUSD 1,510,000 20,000,000 No Change 783,150 N/A 13,000,000
USDC 48,510,000 2,000,000,000 150,000,000 15,870,000 N/A 100,000,000
USDT 3,880,000 2,000,000,000 25,000,000 3,100,000 N/A 16,000,000
AAVE 61,890 100,000 45,000 N/A N/A N/A
LINK 93,050 258,000 160,000 10,661 141,900 84,000
WBTC 636 1,100 620 21 605 250

Avalanche

A deciding Snapshot vote with two options for the community to vote on.

  • Both options will have the same recommendations for stables (DAI, FRAX, MAI, USDC, and USDT), AAVE, and LINK - as proposed in the original post.

  • WETH - As the supply cap is almost identical, we recommend incorporating Chaos Labs’ borrow cap recommendation as it is more conservative while still allowing room for significant borrowing (~17% utilization).

  • WAVAX - incorporate Gauntlets’ recommendations.

  • Let the community decide between the following options for BTC.b and WBTC.e:

    • Aggressive - the higher supply and borrow cap between the two options.
    • Conservative - the lower supply and borrow cap between the two options.
  • It is important to note that for BTC.b, both proposals effectively freeze new supply.

Recommendations :

Asset Current Supply Current Supply Cap Recommended Supply Cap Current Borrow Current Borrow Cap Recommended Borrow Cap
DAI 12,260,000 2,000,000,000 30,000,000 6,480,000 N/A 20,000,000
FRAX 16,260 50,000,000 1,500,000 15,281 2,000,000 1,000,000
MAI 113,620 50,000,000 700,000 103,660 2,000,000 460,000
USDC 156,940,000 4,000,000,000 250,000,000 97,960,000 N/A 175,000,000
USDT 52,450,000 2,000,000,000 200,000,000 35,930,000 N/A 140,000,000
AAVE 3,860 4,500 5,800 N/A N/A N/A
LINK 294,870 353,000 440,000 5,750 220,000 No Change
WETH 22,960 113,000 38,000 3,438 62,150 20,500
WAVAX 2,890,000 13,100,000 3,800,000 1,040,000 No Cap 1,200,000

Option 1 - Aggressive

Asset Current Supply Current Supply Cap Recommended Supply Cap Current Borrow Current Borrow Cap Recommended Borrow Cap Notes
BTC.b 3,950 5,800 3,500 364 3,190 1,900 freezes supply
WBTC.e 1,340 5,233 2,000 223 No Cap 1,100

Option 2- Conservative

Asset Current Supply Current Supply Cap Recommended Supply Cap Current Borrow Current Borrow Cap Recommended Borrow Cap Notes
BTC.b 3,950 5,800 3,000 364 3,190 900 freezes supply
WBTC.e 1,340 5,233 1,400 223 No Cap 770
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