# \[ARC\] Gauntlet Recommendations for wstETH on Aave V3 Arbitrum **URL:** \ **Category:** Risk\ **Created:** [April 6, 2023, 1:27am UTC](https://governance.aave.com/t/arc-gauntlet-recommendations-for-wsteth-on-aave-v3-arbitrum/12675 "2023-04-06T01:27:45Z")\ **Posts on this page:** 6\ **Page:** 1
**Author:** ![Pauljlei](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/pauljlei/32/3488_2.png) [@Pauljlei](https://governance.aave.com/u/Pauljlei)\ **Post date:** [April 6, 2023, 1:27am UTC](https://governance.aave.com/t/arc-gauntlet-recommendations-for-wsteth-on-aave-v3-arbitrum/12675/1 "2023-04-06T01:27:45Z")
## Simple Summary Per our [Methodology](https://governance.aave.com/t/gauntlet-methodologies-borrow-and-supply-cap/11487), 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](https://governance.aave.com/t/gauntlet-market-alerts-mar-2023/12159/13), 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. ## Specification | Asset | Cap | Current Cap | Conservative Cap Rec | Aggressive Cap Rec | | --- | --- | --- | --- | --- | | wstETH | Borrow | 400 | 2,800 | 5,456 | ### wstETH ![](https://i.imgur.com/4QGFj57.png) # Next Steps: - Targeting AIP on 4/11/2023 ---
**Author:** ![Pauljlei](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/pauljlei/32/3488_2.png) [@Pauljlei](https://governance.aave.com/u/Pauljlei)\ **Post date:** [April 11, 2023, 12:38am UTC](https://governance.aave.com/t/arc-gauntlet-recommendations-for-wsteth-on-aave-v3-arbitrum/12675/2 "2023-04-11T00:38:59Z")
AIP is now live: > **[Aave - Open Source Liquidity Protocol](https://app.aave.com/governance/proposal/?proposalId=200)** > > Aave is an Open Source Protocol to create Non-Custodial Liquidity Markets to earn interest on supplying and borrowing assets with a variable or stable interest rate. The protocol is designed for easy integration into your products and services. ---
**Author:** ![Nyyls](https://avatars.discourse-cdn.com/v4/letter/n/4bbf92/32.png) [@Nyyls](https://governance.aave.com/u/Nyyls)\ **Post date:** [April 15, 2023, 2:44pm UTC](https://governance.aave.com/t/arc-gauntlet-recommendations-for-wsteth-on-aave-v3-arbitrum/12675/3 "2023-04-15T14:44:41Z")
> [@Pauljlei](#): > > We will revisit immediately post-upgrade on April 12th. When can we expect some new info here? Especially interested in wsteth supply cap on arbitrum V3 ---
**Author:** ![tuanyuan2008](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/tuanyuan2008/32/3486_2.png) [@tuanyuan2008](https://governance.aave.com/u/tuanyuan2008)\ **Post date:** [April 18, 2023, 5:31pm UTC](https://governance.aave.com/t/arc-gauntlet-recommendations-for-wsteth-on-aave-v3-arbitrum/12675/4 "2023-04-18T17:31:28Z")
wstETH is in the Ethereum-correlated eMode pool on Arbitrum Aave v3. Recall the assumptions in [Gauntlet’s eMode methodology for LSTs](https://governance.aave.com/t/arfc-gauntlet-e-mode-methodology-aave-v3-liquid-staking-tokens/12700). 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. ---
**Author:** ![Pauljlei](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/pauljlei/32/3488_2.png) [@Pauljlei](https://governance.aave.com/u/Pauljlei)\ **Post date:** [April 18, 2023, 5:43pm UTC](https://governance.aave.com/t/arc-gauntlet-recommendations-for-wsteth-on-aave-v3-arbitrum/12675/5 "2023-04-18T17:43:51Z")
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. ---
**Author:** ![Pauljlei](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/pauljlei/32/3488_2.png) [@Pauljlei](https://governance.aave.com/u/Pauljlei)\ **Post date:** [April 18, 2023, 6:09pm UTC](https://governance.aave.com/t/arc-gauntlet-recommendations-for-wsteth-on-aave-v3-arbitrum/12675/6 "2023-04-18T18:09:26Z")
The [wstETH Borrow Cap increase on V3 Arbitrum](https://app.aave.com/governance/proposal/?proposalId=200) has been implemented.