[ARFC] - Chaos Labs Risk Stewards - Increase Supply and Borrow Caps on V3 Ethereum - 09.25.2023


A proposal to increase the following caps on V3 Ethereum:

  • Supply cap for LUSD
  • Supply and Borrow cap for USDT


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


The supply cap for LUSD on V3 Ethereum is currently at near 100% utilization.

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Please note there is a single account currently supplying nearly 60% of all LUSD, utilizing it to borrow mainly USDT and USDC, with a health score of 1.62.

Considering the market’s concentrated nature, our recommendation is to raise the supply cap by 1.5X. This adjustment would allow for further analysis of additional usage before considering a more aggressive increase. However, we do not advise increasing the borrow cap, as the current utilization remains low.


The supply and borrow caps for USDT on V3 Ethereum are currently at 88% and 73% utilization, respectivly.

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We recommend doubling both supply and borrow caps.


Chain Asset Current Supply Cap Recommended Supply Cap Current Borrow Cap Recommended Borrow Cap
Ethereum LUSD 12,000,000 18,000,000 8,000,000 No Change
Ethereum USDT 300,000,000 600,000,000 250,000,000 500,000,000

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.


Gauntlet supports raising the supply cap for LUSD and the supply and borrow caps for USDT on Ethereum Aave v3.

1 Like

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

This update has been executed via Risk Steward.

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