[ARFC] Chaos Labs Risk Stewards - Increase GHO Minting Cap - 03.01.24


A proposal to increase the GHO minting cap to 40M.


The recent surge in GHO use cases and liquidity, notably exemplified by the introduction of the GHOTHENA liquidity pool on Curve, which currently holds 18.5% of the total GHO in circulation, has significantly heightened demand and rendered speculative GHO yields increasingly attractive.

Screenshot 2024-02-29 at 23.53.31

Moreover, the doubling of stkGHO emissions, alongside a potential adjustment of GHO interest rates to better reflect market-priced rates, establishes clear parameters for cautiously raising the GHO minting cap. This measured approach is warranted given the evolving landscape of GHO utilization and market dynamics, ensuring alignment with demand while maintaining stability within the ecosystem.



Next Steps

We will move forward and implement these updates via the Risk Steward process. If the current momentum and market conditions remain, we aim to gradually raise the GHO minting cap to 50 million over the next weeks by implementing incremental borrow cap increases of 5M every five days, per the risk steward limitation. We will closely monitor market behavior and evaluate this decision with every increase.


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


Copyright and related rights waived via CC0


We have created and executed the tx for this proposal.


Hi ChaosLabs,

is there any reason why we are only doing 5m steps per week?
The cap was basically minted within minutes.
In my opinion we should raise the overall target to 75-100m and increase the steps from 5m to 7.5m.
Obviously GHOs peg should always be considered, but we can definitely see that because of Merit and the SM there is huge demand for GHO. If we do steps too small we may loose traction and other protocols wont be able to implement GHO.

Happy to hear other opinions, but would like to see GHO being a bit more aggressive.

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Hello, while i’d love to be more aggresive, @ChaosLabs is in sync with the ALC and we’re monitoring pretty closely the peg.

Long story short, “small” bursts like this one regularly are much easier to control in terms of peg resilience than a 15/20M mint at once.

After the StkGHO & Borrow rate AIPs next week, we’ll advocate for a larger bump, the objective is reaching 50M GHO asap.

The good news is each increase ending up with resilient peg, results in the peg being even more ressilient for the future, it’s a virtuous feedback loop when operated carefully.


When can we expect to have an increase in the current cap? I would like to know in advance (probably others too) because I didn’t have enough time the limit capacity was reached pretty quickly. Thanks!

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The Steward is authorized to act every five days. Therefore, the earliest possible time for action would be three days from now,

In a more practical scenario, the AIP aimed at increasing the BR rate, which is likely to have a positive impact on the peg, has reached quorum. This proposal is expected to be enforced two days from now. We will advocate for another increase if this proposal proves sufficient to create more secondary liquidity buy walls.

Alternatively, the AIP proposing to double the STKGHO incentives, which has an even higher likelihood of supporting the peg, is currently under review. It is anticipated that this proposal will be validated tomorrow, placing us in a position for potential enforcement six days from now.

If, for some reason, neither of these proposals yields the desired results, the ALC may need to promote additional “buy walls” Pool incentives. A new ALC funding proposal is currently under discussion and will not be ready for consideration for a few more days.

There is no definitive and easy answer. The primary objective for Aave SPs is to uphold and augment the strength of the GHO peg, contributing to a positive feedback loop. Given the unpredictability of future market movements, we can only implement strategies that enhance our overall chances of success.


@ChaosLabs when are you planning to increase the minting cap again?

We are aligned with Chaos Labs’ conservative approach to increasing the minting cap, it is important to ensure that we meet the demand for minting GHO safely. A slower approach while maintaining peg stability would be optimal for now.

I recommend service providers to not ignore valid questions from community members. This question hasn’t been answered for over two weeks. CC @ACI @karpatkey_TokenLogic @ChaosLabs

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