[ARC] Gauntlet Recommendations for wstETH on Aave V3 Arbitrum

Simple Summary

Per our Methodology, Gauntlet would recommend the following changes to the caps:

  • Increase wstETH Borrow Cap from 400 to 800.
    • While our conservative rec is 2,800, we are limiting the change to 800, per community guidelines on increasing caps.

As previously mentioned, we do not recommend increasing the supply cap for wstETH and recommend a more conservative borrow cap increase at this time due to the impending Shanghai Upgrade. We will revisit immediately post-upgrade on April 12th.


Asset Cap Current Cap Conservative Cap Rec Aggressive Cap Rec
wstETH Borrow 400 2,800 5,456


Next Steps:

  • Targeting AIP on 4/11/2023

AIP is now live:

When can we expect some new info here? Especially interested in wsteth supply cap on arbitrum V3

wstETH is in the Ethereum-correlated eMode pool on Arbitrum Aave v3. Recall the assumptions in Gauntlet’s eMode methodology for LSTs. The supply cap considers liquidity at both abnormal and normal price dislocations:

  • (abnormal) maximum amount able to be liquidated within a 1-LT drop over a time range if the current liquidity is halved, with no additional liquidity inflow
  • (normal) 20x corresponding to a 1% price drop, bounded by 50% of the onchain circulating supply.

We aim to revisit once the community has aligned on a risk preference as presented in the above forum post.

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For further clarity, if the community has a conservative preference, as presented in Gauntlet’s eMode methodology for LSTs, then they may not wish to increase caps for wstETH on V3 Arbitrum at this time.

The wstETH Borrow Cap increase on V3 Arbitrum has been implemented.