# \[ARFC\] Chaos Labs Risk Stewards - Increase Supply and Borrow Cap for USDC and USDT on V3 Arbitrum - 06.12.2024 **URL:** \ **Category:** Governance\ **Created:** [June 12, 2024, 12:51pm UTC](https://governance.aave.com/t/arfc-chaos-labs-risk-stewards-increase-supply-and-borrow-cap-for-usdc-and-usdt-on-v3-arbitrum-06-12-2024/17957 "2024-06-12T12:51:03Z")\ **Posts on this page:** 3\ **Page:** 1
**Author:** ![ChaosLabs](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/chaoslabs/32/6850_2.png) [@ChaosLabs](https://governance.aave.com/u/ChaosLabs)\ **Post date:** [June 12, 2024, 12:51pm UTC](https://governance.aave.com/t/arfc-chaos-labs-risk-stewards-increase-supply-and-borrow-cap-for-usdc-and-usdt-on-v3-arbitrum-06-12-2024/17957/1 "2024-06-12T12:51:03Z")
# Summary A proposal to increase the supply and borrow caps on USDC and USDT on V3 Arbitrum # Motivation ## USDT (Arbitrum) USDT is approaching its 75% of its supply cap and 89% of its borrow cap following sustained growth in the market in recent weeks. ![Untitled - 2024-06-11T164544.858](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/b/b32b8878106fd7e0a7ab5babbbbe92fb8c07d637.png) ### Supply Distribution 9 of the 10 top suppliers are not borrowing against their positions, putting this market at lower risk of a large liquidation cascade. ![Untitled - 2024-06-11T164546.783](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/a/a87c6edd922959375f98af67df2daf84b62eaee2.png) Borrows against USDT are limited, at just $4.42M, $2.63M of which is WETH; these positions are at risk of liquidation should WETH’s price rise. ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/c/c05d033a5cfc5bed74272086ed11dc5563e550c8.png) ### Borrow Distribution Borrowers are well distributed, with the top borrower borrowing $3.03M USDT, accounting for less than 5% of the total borrows. ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/6/60d70bb5a770b44c6b0af15db4b2d1b83a6d5053.png) Overall, WETH and WBTC are the most popular collateral assets against USDT, followed by wstETH. ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/a/a4e6e6aa7b5c8a8855c71e085a4aa8a476b1f834.png) ### Recommendation Given on-chain liquidity and user distribution, we recommend increasing the supply cap to 130M and the borrow cap to 120M ## USDC (Arbitrum) USDC is approaching its nearly 88% utilization of its supply and borrow cap following sustained growth in the market in recent weeks. ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/9/997588530e39a4533f3e86ed1746f3f305782d55.png) ### Supply Distribution 7of the 10 top suppliers are not borrowing against their positions, putting this market at lower risk of a large liquidation cascade. ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/3/3ab4e840160eaa93998a9fee791e95512dc26c33.png) Borrows against USDT are limited, at just $25.72M, $17.44M of which is WETH and WBTC ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/0/00652375eea4410b236101cce4c8a76680116da4.png) ### Borrow Distribution The largest [borrower](https://community.chaoslabs.xyz/aave/risk/wallets/0xad38255febd566809ae387d5be66ecd287947cb9) is the dHedge 3x ETH strategy, with $90.3M WETH deposited and $61.8M USDC borrowed against their collateral. The second largest [borrower](https://community.chaoslabs.xyz/aave/risk/wallets/0xad38255febd566809ae387d5be66ecd287947cb9) is the dHedge 3x BTC strategy, with $77.06M WBTC deposited and $51.08M USDC borrowed. ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/b/b55ddd779433ff7d67f6baaa2c4a4e9e74f19c00.png) ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/2/2f36175f6d7907d0be859b024a1f39ff6159a06e.png) ### Recommendation Given on-chain liquidity and user distribution, we recommend increasing the supply and borrow cap to 350M and 320M, respectively, ## Specification | Chain | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap | | --- | --- | --- | --- | --- | --- | | Arbitrum | USDT | 100,000,000 | 130,000,000 | 70,000,000 | 120,000,000 | | Arbitrum | USDC | 300,000,000 | 350,000,000 | 270,000,000 | 320,000,000 | ## 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](https://creativecommons.org/publicdomain) ---
**Author:** ![ChaosLabs](https://dub1.discourse-cdn.com/flex013/user_avatar/governance.aave.com/chaoslabs/32/6850_2.png) [@ChaosLabs](https://governance.aave.com/u/ChaosLabs)\ **Post date:** [June 12, 2024, 2:49pm UTC](https://governance.aave.com/t/arfc-chaos-labs-risk-stewards-increase-supply-and-borrow-cap-for-usdc-and-usdt-on-v3-arbitrum-06-12-2024/17957/2 "2024-06-12T14:49:28Z")
The transaction for this proposal has now been executed. ---
**Author:** ![system](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/e/e11637c36f45ffa158f2146f5c19438d46e0824d.svg) [@system](https://governance.aave.com/u/system)\ **Post date:** [July 12, 2024, 2:50pm UTC](https://governance.aave.com/t/arfc-chaos-labs-risk-stewards-increase-supply-and-borrow-cap-for-usdc-and-usdt-on-v3-arbitrum-06-12-2024/17957/3 "2024-07-12T14:50:09Z")
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