Summary
A proposal to:
- Increase AAVE’s supply caps on Aave’s Arbitrum deployment.
- Increase AAVE’s supply caps on Aave’s Polygon deployment.
Motivation
AAVE (Arbitrum)
AAVE has reached 94% supply cap utilization on Arbitrum.
Supply Distribution
Most of the top AAVE suppliers use mixed collaterals in their positions. The majority borrow USDC or USDT, while a few borrow volatile assets such as WETH and WBTC. The majority of the large open positions have low liquidation risk due to their high health scores.
Overall, stablecoins represent 60.43% of the value borrowed against AAVE.
Recommendation
Given the users’ behavior and on-chain liquidity, we recommend increasing the supply cap to 14,000 AAVE.
AAVE (Polygon)
AAVE has reached 97% supply cap utilization on Polygon.
Supply Distribution
The biggest AAVE supplier represents a significant portion of the supply and is currently a collateral-only position. The remaining positions show a mix of high health scores. The predominant assets being borrowed against AAVE are stablecoins, which provide a low liquidation risk.
Overall, stablecoins represent 93.65% of the value borrowed against AAVE.
Recommendation
Given the users’ behavior and on-chain liquidity, we recommend increasing the supply cap to 100,000 AAVE.
Specification
| Chain | Asset | Current Supply Cap | Recommended Supply Cap |
|---|---|---|---|
| Arbitrum | AAVE | 7,200 | 14,000 |
| Polygon | AAVE | 70,000 | 100,000 |
Next Steps
We will move forward and implement these updates via the Risk Steward process.
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this ARFC.
Copyright
Copyright and related rights waived via CC0