[ARFC] - Chaos Labs Risk Stewards - Increase Supply and Borrow Caps on Aave V3 - 09.12.2023


A proposal to increase:

  • Optimism
    • Supply cap for LINK
  • Arbitrum:
    • Supply cap for LUSD
  • Metis
    • Supply cap for METIS


The recommendations below were made utilizing Chaos’ supply and borrow cap methodologies and after analyzing user positions for each asset.

LINK (Optimism)

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The supply cap for LINK on V3 Optimism is currently at 100% utilization.

Although the stress testing framework allows for a more substantial increase of the cap, we recommend limiting the supply caps to 50% of the total onchain circulating supply, which is 210K LINK.

LUSD (Arbitrum)

The supply cap for LUSD on Ethereum is currently at 100% utilization.

Untitled - 2023-09-12T150605.604

The total circulating supply of LUSD on Arbitrum is currently 3M. As LUSD is not utilized as collateral, we currently recommend capping the supply at 60% of the total on-chain circulating supply, setting the cap at 1.8M LUSD.

METIS (Metis)

The supply cap for METIS on V3 Metis is currently at 81%

Untitled - 2023-09-12T150608.771

As Metis is listed as a non-collateral asset, we recommend doubling the current supply cap to 120K METIS.


Chain Asset Current Supply Cap Recommended Supply Cap Current Borrow Cap Recommended Borrow Cap
Optimism LINK 160,000 210,000 84,000 No Change
Arbitrum LUSD 1,400,000 1,800,000 900,000 No Change
Metis METIS 60,000 120,000 4,000 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.

1 Like

Gauntlet is aligned with these supply cap increases.

1 Like

We’ve prepared the payload to be executed via the Risk Steward process for this proposal.

These have been executed via risk steward.

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