[ARFC] Chaos Labs Risk Stewards - Increase Caps rETH and wstETH on V3 Arbitrum

Governance
1

Summary

A proposal to increase the following caps on V2 Arbitrum:

  • Supply cap for wstETH
  • Supply and borrow cap for rETH

Motivation

The supply and borrow cap for rETH and the supply cap for wstETH on V3 Arbitrum are currently at nearly 100% utilization.

rETH
Utilizing our supply cap methodology , we conducted stress tests simulating depeg scenarios (up to 15%), yielding the results in the graphs below. With a 2X increase in the caps and current liquidity levels, we do not anticipate bad debt to the protocol, even under extreme conditions.
image

wstETH
Following our analysis here for wstETH on Arbitrum, we recommend increasing the supply cap to 30K.

Specification

Chain Asset Current Supply Cap Recommended Supply Cap Current Borrow Cap Recommended Borrow Cap
Arbitrum rETH 325 650 85 170
Arbitrum wstETH 18,750 30,000 800 No Change

Next Steps

Once we receive feedback from @Gauntlet on the above recommendations, we will be able to move forward to implement these updates via the Risk Steward process.

Disclaimer

Chaos Labs has not been compensated by any third party for publishing this proposal.

Copyright

Copyright and related rights waived via CC0

2 Likes
2

I also would like to request an increase in the cap of LSDs on Arbitrum. By having a higher cap for rETH and wstETH on Aave, it would allow more people to utilize DeFi products on Arbitrum, which lowers the barrier of entry for new users due to lower transaction cost than mainnet.

I am just replying to this message instead of reposting my own thread to not clutter the forum.

3

We are aligned on the rETH supply and borrow cap increase.

For wstETH, as we’ve stated here, should the community wish to increase wstETH supply cap on Arbitrum, they should move to AIP. We will consider cap increases after community alignment on LST killswitches.

4

We’ve prepared the payload for the rETH supply and borrow cap increases to be executed via the Risk Steward process for this proposal.

5

The rETH supply/borrow cap increase has been executed via risk steward.

6

As there is no alignment between the risk providers for increasing the supply cap for wstETH on Arbitrum, we have published AIP-265 to increase the supply cap from 18,750 to 30,000.

Thank you in advance for your participation in the vote.

7

Thanks for your effort.

After it is Executed, when will the cap be lifted on the dashboard?

Thanks again.

8

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