# \[ARFC\] Chaos Labs Risk Stewards - Increase Supply and Borrow Cap for USDT on V3 Ethereum - 06.07.2024 **URL:** \ **Category:** Governance\ **Created:** [June 7, 2024, 7:49pm UTC](https://governance.aave.com/t/arfc-chaos-labs-risk-stewards-increase-supply-and-borrow-cap-for-usdt-on-v3-ethereum-06-07-2024/17909 "2024-06-07T19:49:36Z")\ **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 7, 2024, 7:49pm UTC](https://governance.aave.com/t/arfc-chaos-labs-risk-stewards-increase-supply-and-borrow-cap-for-usdt-on-v3-ethereum-06-07-2024/17909/1 "2024-06-07T19:49:36Z")
# Summary A proposal to increase the supply and borrow caps on the following markets: - USDT on Ethereum # Motivation ## USDT (Ethereum) USDT is approaching its supply and borrow caps following sustained growth in the market in recent weeks. ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/0/0ca683bbaa82ab19707a42c847cd45fc6289ede0.png) ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/c/c347f9d0a309481f8a406948b05643e43ab66269.png) ### Supply Distribution All of the 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/c/ca2fab8dea3e088aa1679d07c9321533e030d796.png) Borrows against USDT are limited, at just $27.1M, $23.69M 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/2/2e3679dfd6e98189b4d86ad5398213f92ead70ab.jpeg) ### Borrow Distribution The largest borrow is $82M USDT against $222M WETH, leading to a relatively strong health score of 2.24. Additionally, the assets being used as collateral in the largest borrow positions are largely those with the deepest on-chain liquidity. ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/0/09d164ccd890e99ed08e9fb9a17fa684b5dffca6.png) Overall, wstETH and WETH are the most popular collateral assets against USDT, followed by WBTC. ![image](https://europe1.discourse-cdn.com/flex013/uploads/aave/original/2X/3/39e0ba854032b5e53ee777a965115770aa3089bb.jpeg) ### Recommendation Given on-chain liquidity and user distribution, we recommend increasing the supply and borrow caps by 500M USDT each. ## Specification | Chain | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap | | --- | --- | --- | --- | --- | --- | | Ethereum | USDT | 1,500,000,000 | 2,000,000,000 | 1,400,000,000 | 1,900,000,000 | ## 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 7, 2024, 8:27pm UTC](https://governance.aave.com/t/arfc-chaos-labs-risk-stewards-increase-supply-and-borrow-cap-for-usdt-on-v3-ethereum-06-07-2024/17909/2 "2024-06-07T20:27:16Z")
The transaction for this proposal has 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 7, 2024, 8:28pm UTC](https://governance.aave.com/t/arfc-chaos-labs-risk-stewards-increase-supply-and-borrow-cap-for-usdt-on-v3-ethereum-06-07-2024/17909/3 "2024-07-07T20:28:14Z")
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