Summary
A proposal to:
- Increase the weETH supply and borrow caps on Aave V3’s Ethereum deployment.
weETH
Motivation
weETH has reached its supply and borrow caps on Ethereum.
Supply Distribution
Most of the top suppliers are borrowing WETH against weETH collateral, putting these positions at limited risk of liquidations, given the calculated oracle for weETH.
There is, however, a user supplying 2.05K weETH along with 309 WBTC, for an overall position of $26.77M supplied and $15.67M borrowed, giving a health score of 1.32. This position is at risk of liquidation should WBTC and/or weETH’s price decline, though on-chain liquidity would support efficient liquidations.
Overall, WETH represents 92% of the value borrowed against weETH.
Borrow Distribution
The largest borrower is borrowing against WETH collateral, while the next two largest are borrowing against weETH itself, putting all of these positions at low risk of liquidation.
Recommendation
Given the coming vote to more aggressively increase caps, we recommend a 1.5x increase in supply can and 2x increase in borrow cap in this Risk Steward transaction.
Specification
| Chain | Asset | Current Supply Cap | Recommended Supply Cap | Current Borrow Cap | Recommended Borrow Cap |
|---|---|---|---|---|---|
| Ethereum | weETH | 32,000 | 48,000 | 1,600 | 3,200 |
Next Steps
We will move forward and implement these updates via the Risk Steward process.
For transparency, the risk steward transaction will be executed at 5pm GMT
Disclaimer
Chaos Labs has not been compensated by any third party for publishing this ARFC.
Copyright
Copyright and related rights waived via CC0