[ARC] Gauntlet Recommendations for AAVE, LINK, and WETH on V3 Arbitrum - 2023.03.21

Risk
1

Simple Summary

Gauntlet would like to flag that assets AAVE, LINK, and WETH supply caps are above the 75% threshold. As per our Methodology, Gauntlet would recommend the following proactive changes:

  • Increase WETH’s Supply Cap from 35,280 to 45,000
  • No Increase to AAVE Supply Cap
  • No Increase to LINK Supply Cap

Gauntlet will continue to monitor the on-chain liquidity of these assets, especially AAVE and LINK, and make recommendations if required.

Specification

Asset Curren Supply Cap Current Supply Conservative Supply Cap Aggressive Supply Cap Gauntlet Recommendation
LINK 677,000 536,000.00 590,741 984,568 No Increase
AAVE 1,850 1,530 1,122 1,871 No Increase
WETH 35,280 27,470 45,000 161,112 45,000

If the community believes in strategically pushing growth over on-chain liquidity risk management, the community may elect to increase the LINK supply cap.

WETH

LINK

AAVE

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AIP Update

In order to reduce governance fatigue, Gauntlet is bundling several parameter changes given that they are all cap updates. Gauntlet will be bundling parameter changes on ETH V3 and rETH along with these parameter changes in this forum post.

To summarize, the AIP will incorporate the following changes:

V3 Arbitrum:

  • Increase WETH’s Supply Cap from 35,280 to 45,000

V3 ETH:

  • Increase rETH’s Supply Cap from 10,000 to 20,000
  • Decrease CRV’s Supply Cap from 62,500,000 to 51,000,000

In order to avoid voting on the weekend, we plan on putting up the AIP on Monday 3/27/2023.

1 Like
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AIP is up

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As an update, we are working on incorporating the WETH changes here.

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The WETH change on Arbitrum (increasing WETH Supply Cap) has not been implemented yet - we plan to implement it in our next batch of updates.

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The WETH change has now been implemented.